Update: Grange Personal Lines President Said Insurers to Eye Rate Hikes in Midwest

(Corrects headline with the title of Joseph DiMartino, who is president of personal lines for Grange Insurance.)

Joseph DiMartino, new president of personal lines for Grange Insurance, said that like many insurers who write in the Midwest, his company is seeing its share of major catastrophe losses. And looking to boost its rates.

The company reported a small underwriting loss in 2008, driven by frequent and severe weather events ? especially the aftermath of Hurricane Ike last September, which caused an estimated $500 million in insured losses in Ohio (BestWire, Sept. 29, 2008).

With jumps in hail, wind and ice events in the region, DiMartino said Grange, like many of its competitors, will seek rate hikes.

Comparing a period from 2001 to 2005 with the company's most recent experience, DiMartino, who was the company's regional president of personal lines prior to his promotion, said weather-related losses have nearly doubled.

"Given that near doubling of weather losses, combined with some difficult economic circumstances that have been impacting in particular large losses ? such as fire severity ? and our losses in homeowners are up 50%," said DiMartino, who added that Grange expects to yield results from investments it made in a new homeowners rating methodology. The program allows the insurer to evaluate individual perils separately to establish a "more granular rate level and segment better" for pricing.

DiMartino said the key to the future of the insurer's property lines is to expand into states responsibly and recognize the opportunities for organic growth.

"We need to grow into states that have a more favorable experience from an industry perspective," DiMartino said. Over the past several years, Grange expanded to South Carolina, Virginia and Pennsylvania but has since opted out of the property market in South Carolina because the state has "a lot of risk we're not quite able to sustain."

Grange is also honing in on opportunities in organic growth, DiMartino said. The insurer operates in 10 states and is concentrated in its home state of Ohio and Kentucky, but "in the remaining eight we're really not, so there is definitely an opportunity there." DiMartino said, noting Grange has a four-year plan for agency expansion to accomplish growth in the states it does business in.

"We need to make sure we are exploiting our existing position and achieve a level of consistent returns," he added. "That's an area where I think we've struggled."

Grange will enter new states over time, said DiMartino. Grange Mutual Casualty Co. specializes in private passenger automobile and homeowners multiperil business, with some 52% of the company's direct written premium representing private passenger auto, according to an AMB Credit Report.

DiMartino said this year Grange will realize a 60% increase above the company's typical range of appointment of agents.

Members of Grange Mutual Casualty Pool currently have a Best's Financial Strength Rating of A (Excellent).