Ronald G. Boyd, CPCU, CIC
President/Chief Executive Officer
Midwest Family Mutual Insurance Company
Website: https://midwestfamily.com/
Ron Boyd (03.25.08)
Ronald G. Boyd, CPCU, has been president and chief executive officer of Midwest Family Mutual Insurance Company of Plymouth, Minnesota since 2000. Mr. Boyd joined Midwest Family in 1991. The company, which was formed in 1891, is a multi-line property and casualty insurer that sells both personal and commercial lines products through approximately 500 independent insurance agents in Illinois, Iowa, Minnesota, Nebraska, North Dakota, South Dakota and Wisconsin.
Prior to joining Midwest Family, Mr. Boyd was president of Norwest Insurance Minnesota from 1988 to 1991. Before that, he served as vice president of Continental Western Insurance Company in Des Moines, Iowa, from 1974 to 1988.
Mr. Boyd holds a B.S. degree from Drake University, having majored in both insurance and management. He also is a Chartered Property Casualty Underwriter, having attained that designation in 1978. He is also an FAA “instrument-rated” pilot.
For the past two years, Mr. Boyd has served as Chairman of the Insurance Federation of Minnesota, a non-profit state insurance trade association representing approximately 60 insurance companies and several other related organizations. The IFM, based in St. Paul, represents mutual and stock companies with many different lines of insurance: Property/Casualty, Reinsurance, Business Lines and Personal Lines.
The Interview
Mr. Boyd, your company recently issued a news release in which you said that you may be the first insurer in the nation to declare operational “green’ status. The release mentioned that this process actually began in 2003, so let’s begin by having you describe the first steps that your company undertook to achieve operational “green” status?
Beginning in 2003, we began implementing a number of electronic processes at Midwest Family. After installing imaging and electronic workflow developed by CGI (a leading provider of Information Technology and business process services), Citrix technology and Voice Over Internet Protocol (VOIP) from 3COM, we began testing processes with employees working from home. By September 2006, all but two of our 65 employees work from their homes. With no commuting, our employees save an estimated 25,000 gallons of fuel per year, as well as, wear and tear expense on employee-owned automobiles.
Outsourcing our policy print and production also cut our paper and postage needs due to a number of electronic notification processes. Our paper usage is down 65 percent.
In May, Midwest Family will serve as a beta site for CGI’s INSideOUT policy and claims software suite. This new version is Web-based and will incorporate Web 2.0 technology.
In 2007, your company sold its office building and rented a more modest and energy efficient rental property. Can you explain some of the rationale behind that decision and what it meant in terms of becoming more “green?”
We wanted to realize the hidden value (surplus) in our real estate. Our 24,000 square foot office building was being carried at roughly $300,000 (original cost less depreciation). We sold it and converted its sales value of $2.6 million to liquid invested assets. Investment income grew roughly $80,000 as these after tax funds were invested in bonds. After taxes, our surplus gained $1.5 million.
We now lease a more energy efficient rental property in Plymouth, Minnesota, that conforms to the Environmental Protection Agency’s Energy Star standards.
What has been the reaction of your employees to your “green” initiatives?
When the idea was first floated three to four years ago, it received a lukewarm reception at best. It was change and rather radical change at that. Our managers and supervisors were probably the most skeptical. But as we put more and more issues on the table and found solutions, the more our employees “warmed” to the idea.
We have installed software that allows us to measure/manage employee productivity in this at-home environment. I believe I can say without question all our employees like our environment now. Many report less personal stress working from home. Commuting time has been traded for family time with employees telling us that they like seeing their children on and off the school bus each day.
Your release also mentioned that going “green” has had a positive impact on your company’s financial “green.” Can you explain that statement in more detail?
Our expense ratio has dropped to roughly 26 percent over the past four years from roughly 33 percent. We have grown around a relative fixed expense base.
We have not added more management even though our written premium ($70 million a year) has grown substantially. We hire self-motivated employees whose productivity is up 10 to 15 percent over the past four years. Our employees are much more apt to complete that “last” transaction of the day since they don’t have to “beat” the traffic in a commute.
Emails and other evidence of work are taking place at times of day that did not occur before our switch to an at-home environment. Our employees have developed a “24 hour on call” mentality to customer service. This has not developed as a Midwest Family required standard. It is my opinion it has just matured as a part of our culture in our new environment. Our service levels have been real beneficiaries.
Finally, what advice do you have for other insurance company presidents and CEOs who may be thinking about making their companies more “green?”
Cutting energy costs go right to the bottom line. This is not only good for the environment, but a company can save money.
NAIC statutory accounting unfortunately does not allow us to recognize the appreciation of home office real estate. It is valued at original cost less depreciation (book value).
A sale is the only way to realize this true value. Also, assets invested in real estate are not liquid and do not have a return when compared to other traditional invested assets. A sale-leaseback can equate to high rental costs. A work from home work force is at least an alternative to consider in the own real estate versus rent dilemma.
