Crawford & Company

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Crawford & Company

FOUNDING AND EARLY SUCCESS

DIVERSIFICATION IN CLAIMS-RELATED SERVICES

ACQUISITIONS CULTIVATE INTERNATIONAL EXPANSION

EXPANSION OF DOMESTIC INSURANCE-RELATED SERVICES

2004–05: RECORD-SETTING HURRICANE SEASON PROMPTS SERVICE UPGRADES

PRINCIPAL SUBSIDIARIES

PRINCIPAL DIVISIONS

PRINCIPAL COMPETITORS

FOUNDING AND EARLY SUCCESS

Jim Crawford, an insurance claims manager, founded Crawford & Company on the idea that an independent claims adjuster service could offer insurance companies a more cost effective and efficient means for handling claims than in-house adjusters. This concept originated from Crawford’s observation that milk from different companies would be more efficiently distributed, at less cost, if an independent company delivered milk for several dairies. Although the dairy companies eschewed the concept, Crawford realized he could apply it to the insurance industry’s claims adjusting process. Thus, on May 27, 1941, Crawford opened Crawford & Company in Columbus, Georgia.

Values and vision were significant factors in the success of the company. Initially, Crawford set forth three principles: (1) “Honesty and integrity above all”; (2) “Hard work pays”; and (3) “Knowledge and creativity are power.” Furthermore, Jim Crawford issued what became known as “General Memorandum No. 1,” from which the company adopted the long-running slogan “Top Quality, Promptly.” The slogan reflected his intention that all claims handled by Crawford & Company would be correct and thorough. Following this idea, Crawford placed great importance on providing continuous training and development for his associates, and he began an internal training program in 1946. Quality training and service established Crawford & Company as the leading independent claims administration company in the United States. Crawford University (as it was named eventually) determined the standard of quality by which claims adjusters would be judged throughout the insurance industry.

The company attained success rapidly and expanded nationwide by handling casualty and workers’ compensation claims for the largest insurance companies. Crawford operated offices in all 50 states. Such success allowed the company to initiate international expansion in 1957. Its first overseas office opened in London that year, followed by an office in Puerto Rico to serve Latin America. International development continued over the next decade, and, to celebrate the 25th anniversary of the company, in 1966, Crawford & Company opened new offices in Canada, Puerto Rico, and England, as well as in the United States. Jim Crawford did not live to oversee further development of the company, however; he died in 1963. Crawford & Company became a public company in 1968, when certain stockholders sold shares on the NASDAQ.

DIVERSIFICATION IN CLAIMS-RELATED SERVICES

During the early 1970s, Crawford & Company began to offer new services to the insurance industry, both within the field of claims adjusting and in supplementary services. In 1971, the company introduced MAYDAY, a claims referral service open 24 hours per day, seven days per week, the first such call center in the industry. Crawford’s diversification beyond casualty claims adjusting included property claims adjusting, such as automobile and heavy equipment damage appraisals, as well as catastrophe-related property loss claims. The company began to offer health and rehabilitation claims administration and operated 70 offices by the end of the 1970s. Also, Crawford offered a comprehensive package of claims administration services for self-insured companies.

The company confronted many changes in the insurance industry during the early 1980s. For instance, price competition among property and casualty insurance companies resulted in an impetus to reduce costs by handling claims adjustments in-house rather than through independent claims adjusters. To accommodate this change, claims adjusters began to handle claims over the telephone, instead of through face-to-face interactions. Also, the movement toward self-insurance reduced reliance on independent adjusters as traditional insurance companies began to offer self-insurance services, effectively increasing Crawford’s competition in this area. Crawford responded by adapting leading information systems. The acquisition of Risk Sciences Group, Inc., expanded Crawford’s ability to provide clients with then cutting-edge online, interactive software. Risk Sciences integrated its Sigma+System with Crawford’s existing software. For the first time, the new system allowed clients access to databases and other information from Crawford’s existing information system.

New services within the Health and Rehabilitation department involved medical coordination, whereby a staff of nurses handled hospital charges, audits, disability cost analysis, and medical interpretation and research. The company met a critical need for oversight in worker’s compensation cases, for evaluation of healthcare delivery. Increasing demand for this department’s service prompted Crawford to expand its geographic reach with the opening of 19 locations in 1983, and 20 locations in 1984, to a total of 121 locations. In 1984, the company acquired IMARC, a job placement company, thereby enhancing Crawford’s ability to provide complete rehabilitation services, from insurance claims administration, through healthcare delivery oversight, to the return to work after healing from an injury. By 1985, Health and Rehabilitation Services accounted for 14 percent of all services; medical coordination accounted for nearly 4 percent.

COMPANY PERSPECTIVES

Vision: Excellence in Everything We Touch. Mission: To be the service provider of choice by delivering the highest quality claims and administrative solutions in each of the markets we serve.

Risk Management Services became an important area of business, as companies sought to prevent accident and injury. Crawford introduced Risk Control Services in 1981 in order to provide programs designed to analyze “pure risk” in the areas of occupational health and safety, personal and family safety and health, as well as liability responsibilities for safety and health, and property and net income protection. Specific services included risk control management, measurement, maintenance, and education and training. Over time, Crawford added related services, such as the Value Appraisals and Risk Survey for identifying factors that contribute to loss.

Growth at Crawford prompted a corporate restructuring of staff at the seven regional offices and at main headquarters. Crawford sought to improve service to clients through communication that would attune the company to client needs. With more than 4,000 claims specialists at 700 risk management service locations in the United States, Puerto Rico, and Canada, Crawford hoped to create a comprehensive approach to providing diverse services. Consolidation of claims and health and rehabilitation offices generated more effective communication between claims and rehabilitation specialists, as well as between employees and clients. The Total Risk Perspective, introduced in 1985, provided employees with the opportunity to exchange information to enhance the perspective brought to a client’s needs through greater understanding of the entire enterprise. Also, the new structure heightened emphasis on marketing, including product development, and involved adding a director of marketing at each of the regional offices.

Crawford continued to develop programs for niche service markets within the insurance industry. In 1985 Crawford introduced a Lease End Inspection Service to provide administration of lease end settlements which were potentially costly and contentious. The new department served a growing market for third-party evaluations, particularly the fleet management and leasing agent markets, to which Crawford offered material damage appraisal services.

Acquisitions furthered Crawford’s expansion in healthcare services. Crawford acquired the utilization review operations of Compass Health Management in early 1988, a move that opened the company to the employee group medical benefits market, a growing field with greater potential than workers compensation services. The 1989 acquisition of Efficient Health Systems, Inc., of Chicago, provided geographic expansion for Crawford’s employee medical benefits services. The acquisition added maternity review to Crawford’s service offerings. In expectation of future growth in long-term care insurance policies, Crawford introduced an assessment service in this field. Also, the company’s hospital audit services department opened four new offices, in Michigan, Florida, Texas, and California, with the intention of expanding the service on a regional basis.

The company’s catastrophe management and environmental pollution claims services grew unexpectedly during the 1980s. Hurricane Alicia’s devastation in the Houston, Texas, area in the fall of 1983 significantly increased property claims and appraisal assignments. In 1985, the catastrophe services unit provided more than 300 property claims specialists as six hurricanes struck land, the first time this had occurred since 1916 and the first time Crawford experienced such demand for its services. After the devastation of Hurricanes Hugo and Jerry and the San Francisco earthquake, all in 1989, Crawford began to provide supervisory personnel as well as claims adjusters. Growth of Crawford’s environmental pollution claims services accelerated with the Exxon Valdez Alaskan oil spill in 1990.

Throughout this period of diversification, Crawford experienced a steady increase in revenues, from $39.8 million in 1972 to $374 million in 1989. That year’s revenues merited the company a listing on the New York Stock Exchange.

ACQUISITIONS CULTIVATE INTERNATIONAL EXPANSION

Expansion into the international marketplace began via a domestic link, when Crawford opened an office in Dallas in 1989 to provide claims adjusters and supervisors for London- and other foreign-based clients involved in underwriting insurance policies in the United States. The business grew rapidly, and the office required expansion within the first year.

KEY DATES

1941:: Company is founded.
1946:: Crawford initiates training program.
1957:: International expansion begins with new office in London.
1968:: Crawford & Company goes public with a listing on the NASDAQ.
1972:: Crawford adds health and rehabilitation services.
1981:: The Risk Control Group launches Crawford into risk management services.
1989:: Public listing changes to New York Stock Exchange.
1994:: International expansion includes acquisitions in England and Canada.
1996–98:: Acquisition of the Thomas Howell Group boosts Crawford’s global presence.
2004:: Record year of hurricanes prompts company to upgrade its catastrophe preparation standards.

Early international development focused on companies in England with extensive operations abroad. In December 1990, Crawford acquired London-based Graham Miller Group Ltd., which provided loss adjusting services to international insurance underwriters through offices in 40 countries, including affiliate offices. Clients included the prominent Lloyd’s of London. The fall 1994 acquisitions of Arnold & Green Ltd. (A & G) and the Brocklehurst Group expanded Crawford’s presence in the United Kingdom. A & G handled employer’s liability and public liability claims, product guarantees, indemnity errors and omissions, and contractors’ all risk loss exposures. Brocklehurst handled property, aviation, marine, agriculture, and oil and energy risk loss exposures. Crawford integrated Brocklehurst and Graham Miller, but A & G remained a separate operating entity. Also, Crawford opened an office in London to provide healthcare management services, such as employer liability and return-to-work services.

The purchase of independent claims loss adjusting firms in Canada melded with Crawford’s existing and recently acquired operations. In 1994, Crawford acquired Finnamore & Partners Ltd. of Halifax, Canada, which provided specialty claims adjusting services in the areas of marine, heavy construction, energy, environment, entertainment, commercial property, and professional liability. The acquisition of ACI Adjusters Canada, initiated in the spring of 1998, made Crawford Canada the largest independent in that country, with 80 offices providing claims administration and disability management.

In June 1996, Crawford increased its global claims management capabilities significantly when a subsidiary acquired a 60 percent interest in Swiss Reinsurance Group (Swiss Re) by acquiring the London-based operation, Thomas Howell Group. As one of the largest reinsurance companies worldwide, Swiss Re operated more than 70 offices in 30 countries. The new organization operated as Crawford-THG. Two years later, Crawford acquired the other 40 percent interest in a stock exchange with Swiss Re, making Crawford-THG a wholly owned subsidiary. Also, Crawford purchased 100 percent of Swiss Re’s THG-Americas operation. International acquisitions connected Crawford with prominent insurance companies worldwide, which provided a base for further growth.

Asia became the focus of international business development in 2005. That year Crawford merged with Godfrey & Company of New Zealand. Operating for Crawford in New Zealand and the south Pacific islands, Godfrey & Company planned to initiate new claims loss-related services in the region. Crawford acquired a 26 percent interest in Puri Anuj & Associates Pvt. Ltd., in India, which handled full service insurance loss adjusting and claims settlement through three offices. The newly merged company operated as Puri Crawford & Associates. Crawford increased its activity in China with the purchase of a 25 percent stake in Tino Insurance Surveyors & Adjusters Co. Ltd. in China. Under the shareholding agreement, Crawford managed the organization, which operated as Crawford Tino Insurance and carried a staff of 35 at offices in Beijing, Shanghai, Shenzen, and Wu Han.

EXPANSION OF DOMESTIC INSURANCE-RELATED SERVICES

During the late 1990s, Crawford’s focus returned to domestic operations. The January 1999 acquisition of The Garden City Group (GCG), specialists in administration of class action settlements and other large-scale litigation, provided Crawford with an entrance into this lucrative area of claims administration, including bankruptcies and mass torts. Synergy between GCG’s operations and Crawford’s large-volume property inspections capability enabled Crawford to offer “one-vendor service” in several kinds of large scale litigation cases. GCG served the northeastern United States primarily, with offices in Garden City and New York, New York; Washington, D.C., and Sarasota, Florida. Crawford expanded Garden City Group by opening offices in Reston, Virginia; Columbus, Ohio; and Seattle, Washington. The company intended to use these offices as outlets for obtaining new clients in each region. New contracts for the new subsidiary included administration of the medical screening component of a diet drug class action settlement.

Crawford entered new fields of operation in 2002 and 2003. The company launched its Dedicated Recovery Unit, based in Tulsa, Oklahoma, to handle specialized debt collection. In 2003, the company’s Investigation Services unit launched an Accident Reconstruction Service. Service innovations included the independent Content Service, which provided price evaluation through a national database.

Other domestic growth occurred through new contracts with prominent national insurance companies. Cypress Property and Casualty Insurance Company of Florida named Crawford & Company as its primary vendor. Claims administration included property and casualty claims, cause and origin, catastrophe, contents valuation, subrogation, and investigation. The Hartford, a national investment and insurance company, expanded Crawford’s preferred vendor relations from property claims adjustment to include cause and origin and surveillance claims services. International business relations with Lloyd’s of London facilitated the appointment of Crawford as Lloyd’s marine services agent in Norfolk, Virginia.

Crawford streamlined its service methods by using advanced technologies to facilitate administration as well as to integrate related claims services for reduced claims processing costs. Through a joint venture with Standard Insurance Company, Crawford initiated an “integrated disability management” (IDM) service. IDM consolidated information in order to provide a more conceptual view of disability and workers compensations claims, such as by factoring in related absenteeism and productivity issues. Also, through integration of disability insurance coverage and claims administration and management, the service would reduce costs by providing employees with a single point of contact.

A new unit, Crawford Integrated Services, offered a comprehensive workers’ compensation claims process by combining the resources of the Risk Management and Healthcare Management Services divisions. Crawford Claims Advantage provided the foundation of the new service model. The proprietary software used interview material and evidence-based research to analyze risk factors for recovery, then to customize medical treatment for the injured employee. Among its other attributes, Crawford Claims Advantage identified issues that required additional attention, such as medical or vocational case management, which could prolong or delay claims resolution.

2004–05: RECORD-SETTING HURRICANE SEASON PROMPTS SERVICE UPGRADES

Increased activity in the company’s Catastrophic Services Management division prompted Crawford to improve its preparation strategies. Toward this end, Crawford’s risk control services formed an alliance with TropicalStormRisk in 2001. The consortium provided long-range forecasting for tropical cyclone strike numbers in the United States, the Caribbean, Japan, and Australia. The British government developed the technology, and the consortium included leading scientists and statisticians, as well as experts in the insurance industry. Crawford believed that correct prediction facilitated lead-time preparation and reduced risk.

Crawford handled a record number of claims due to unprecedented storm activity during 2004 and predictions for a similar level of activity in 2005 motivated the company to invest in its catastrophe services unit. First, Crawford increased its staffing capabilities through direct hire. By identifying and contacting freelance claims adjusters and reestablishing relationships with retirees, the company added more than 1,000 adjusters to its on-call list. To certify adjusters quickly, Crawford expedited the training process.

In order to improve claims loss administration, the company purchased a fleet of satellite communications trucks, 24,000-pound vehicles which provided 10 to 15 wireless telephone lines plus wireless Internet connections for about 250 users. The equipment allowed adjusters to upload claims and download information as needed to facilitate claims processing regardless of local communications infrastructure problems. Also, the technology enabled broadcasts to the company’s Atlanta headquarters.

The predictions by the TropicalStormRisk consortium proved correct, as the 2005 Atlantic storm season produced some of the most devastating hurricanes on record. With a mobile unit stationed in Orlando, Florida, the company’s satellite communications trucks received their first in-action test with Hurricane Dennis, which struck the Florida Panhandle as a category three storm in July. Before Hurricane Katrina, Crawford placed mobile crews in Baton Rouge, Louisiana, and in Mobile, Alabama. Hurricane Katrina, a category five hurricane and one of the most devastating storms on record, struck New Orleans and the Gulf Coast in August; then Hurricane Rita hit the southwest Louisiana coast and part of Texas as a category three hurricane. Hurricane Wilma, another category five storm, hit Florida and the Yucatan in Mexico in November 2005. Moreover, the long-term effects of Hurricane Katrina required the company to hire and train additional claims adjusters.

In providing claims adjusting and administration services during the 2004 and 2005 hurricane seasons, revenues at Crawford increased significantly. The increase compensated for a six-year shortfall in revenues due to a decrease in property and casualty claims administration business, the company’s primary service areas.

Mary Tradii