Insight, analysis & opinion from Joe Paduda

< Back to Home


Liberty Mutual drops the Research Institute – a missed opportunity

A couple weeks ago Liberty Mutual announced it would be closing its Research Institute in June. The news came as a shock to many, including me. Just two months ago I had lauded Liberty for its ongoing support for research into disability.

Before we discuss the Institute’s demise, allow me to reprise that applause for Liberty’s decades-long commitment to the Institute. Just because they are shutting it down today does in no way diminish the great work it did for years, the commitment by Liberty and its policyholder owners to the greater good. We are all better off for that commitment.

On one level I understand why Liberty did this – it’s the dollars. While no one at Liberty has said so, it looks like a financial move, pure and simple. The Institute’s staff is well-paid, the research itself is likely expensive, and in these times of tight focus on unallocated expense management, cutting the Institute’s non-revenue-generating millions in expenses is a quick way to increase earnings.

But I’d suggest this is a mistake, for two reasons.

First, the financial benefit pre-supposes the Institute is “non-revenue-generating”. That’s true, but it could and should have been used much more effectively to advance Liberty’s brand. Yes, that’s not “revenue-generating” in the strictest sense of the term, but there’s NOTHING more important than a brand.

I asked Liberty’s Communications folks two questions; they kindly responded in a timely manner.

Here’s the first.

MCM – My take is Liberty didn’t aggressively promote the Institute or effectively utilize it in marketing and branding efforts. Yes there was the occasional press release or website mention, but it was rarely front-and-center. Why?
LM – We communicate to our customers and business partners in numerous ways on issues that are most important to help them best manage and mitigate risk. Our Research, Risk Control and Claims expertise all play important roles in helping employers and their employees manage current and emerging risks…
We are also keeping our Hopkinton facility open while discontinuing our peer-reviewed research efforts. Our Hopkinton facility will continue to house our Industrial Hygiene Laboratory and Driver Training program, as well as a personal insurance claims training center.
What is evolving is the way that people live and work, and the dynamics of today’s workplace reflect these changes. Liberty remains committed to helping people live safer more secure lives. We are revisiting our approach to accessing research while at the same time continuing to provide our Risk Control and Claims expertise to help commercial insurance policyholders improve both safety and return to work.

Liberty’s response didn’t address my statement about the relationship between the Institute and the company’s branding efforts. “Communicat[ing} to our customers” is talking to people you already do business with. And, communicating without weaving the brand message into that communication constantly and thoroughly minimizes its usefulness.

In my view Liberty didn’t effectively leverage the terrific work done by the Institute, never really connecting the work it does to support Liberty’s overall “lead safer, more secure lives” brand statement.

The lack of effective brand management is by no means unique to Liberty. Rather it is a major problem for the entire workers’ comp and P&C insurance industries. Every player talks about their people, their great claims management and effective underwriting, but few really differentiate. That is why this industry is commoditized; why buyers switch carriers for a few percent, why risk managers follow their consultants’ advice based on a spreadsheet.

Directly and consistently and broadly and cogently tying the Institute’s work to the impact it had on Liberty customers would have been expensive, arduous, in some cases tedious, and totally worthwhile. It would have greatly strengthened the brand by demonstrating Liberty’s depth of commitment to its brand statement.

My second reason is much more debatable.

In these days of awfully insensitive corporate behavior, the Institute stands as a shining example of doing good work without a direct dollar benefit. It is just the right thing to do. While corporations are obliged to support their shareholders, Liberty is a mutual insurer; its owners are its policyholders. One could, and I am, make the argument that the Institute was and remains prima facie evidence of Liberty’s commitment to its “owners”.

What does this mean for you?
Lots of terrific researchers are looking for work. Please reach out to them; here’s one source. 

5 thoughts on “Liberty Mutual drops the Research Institute – a missed opportunity”

  1. Joe, I would flip your argument on differentiation to illustrate the problem. Because too many insurance buyers view insurance as a commodity, the the value of differentiation is diminished. This is especially true for those purchasing guaranteed cost coverage. Numerous broker surveys have shown that price is the #1 determining factor on buying decisions, by a wide margin.

    Some carriers invest in resources to differentiate. But at the end of the day they are put on a spreadsheet where the focus is price. At some point, you have to look at the ROI on efforts to differentiate like this one.

    Finally, I would point out that the last few years Liberty has downsized their workers’ compensation book of business to focus underwriting capital on more profitable lines. Perhaps this just follows that trend.

    See you at NCCI on Wednesday!

    1. Hi Mark – thanks for the note. Won’t be at NCCI – in Albuquerque at NM WC conference this week for a change of pace.

      I’d suggest that commoditization occurs BECAUSE there isn’t non-price-based differentiation. If sellers effectively differentiate, then price becomes much less of an issue. Actually, the better differentiated a seller is, the less important price is.

      That said, your contention re insurance buyers is spot on. With a very few exceptions it’s not uncommon for a risk to move for a few percent differential in premiums.
      We are insured by USAA, have never shopped, and will never shop. They differentiate on service (among other values), and I could not care less about 15% in 15 minutes.

  2. As an employer when I was buying workers comp insurance through a broker it was always about the bottom line. Sometimes we switched every year, it was all about spreadsheets, so comp gave the customers what they wanted. For me State Compensation Insurance Fund while still utilizing its own sales force to sell their product and with their excellent Loss Control personnel where the best of the best in California. Their claims folks did everything by the book and kept everything on the up and up. They now have gone to the dark side of running the shop like other corporations and again trying to deliver what the customers wants but not what they need.

  3. Tom Leamon:
    The branding questions was always a benefit here is Ted Kelly Chaiman of LM on the opening of the last Institute building in 2004:

    “As we cut this ribbon today, we recognize our contributions and renew our commitment to all that this building embodies. And yet, the progress we have made to this building pales relative to the progress we made from within it.” He continued, “In short, within these walls, we changed lives. We kept our promise, and we honored our pledge to help people
    Also the President of Liberty International said on Liberty gaining a license to operate in China::
    “Second, we began to differentiate ourselves in the marketplace through our strength in workplace safety. I can’t say enough about ………. the Liberty Mutual Research Center for Safety and Health, who established Liberty in China as the world-class authority and player in the field of workplace safety.

  4. Joe,

    Thank you for sharing this sad news. Although I am now retired, I was honored to be a LMRIS researcher for 28 years.

    I especially appreciate your comment and link at the end of the piece directing your readers to the Institute staff who are now looking for new jobs. Not an easy task to find health and safety related research positions in the current climate. I suspect that most will end up finding positions in other fields.

    It is such a terrible loss of expertise to the field of dedicated and talented people. It is also a huge loss to the health and safety of workers.

    While a Liberty spokesman noted in a 5/12/17 Boston Globe article “We will use funds to continue and create partnerships with organizations and specialists that give us the flexibility to tap into research studying the evolving ways that people are living and working,” the results and impact will likely fail to “help people live safer and more secure lives.”

Comments are closed.

Joe Paduda is the principal of Health Strategy Associates




A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



© Joe Paduda 2018. We encourage links to any material on this page. Fair use excerpts of material written by Joe Paduda may be used with attribution to Joe Paduda, Managed Care Matters.

Note: Some material on this page may be excerpted from other sources. In such cases, copyright is retained by the respective authors of those sources.