New Insurance Firm Believes In Good Works

By Susan Bush
12:00AM / Tuesday, April 18, 2006

GoodWorks Insurance LLC President and CEO Joseph L. Grochmal

Great Barrington - GoodWorks Insurance LLC President and CEO Joseph L. Grochmal is hoping that his recently-launched insurance company succeeds financially, but the reasons may come as a surprise to most people.

Grochmal has pledged to donate 50 percent of the firm's operating profit on a yearly basis to non-profit, community-based organizations that support education, health care, and public safety.

Simply put, the more money the firm makes, the more revenues there will be to contribute.

And Grochmal isn't waiting for piles of money to roll in before making good on his word; speaking during an April 18 telephone interview, Grochmal said that he will donate a total of $15,000 to local non-profits yearly until the fledgling business generates actual profits.

Donations will be focused on agencies that offer services in communities that host GoodWorks branch offices.

Last week, a $4,000 donation was made to the Berkshire Hills Fund For Excellence, administered through the Berkshire Taconic Community Foundation. The donated revenues will benefit the Berkshire Hills Regional School District.

Patent-Pending

The business strategy - dubbed "responsible capitalism" on the company web site - is so unusual that Grochmal has filed for a "Gift Marketing System" patent; his commitment to the contributions is so unwavering that Grochmal has crafted a legally-binding company contract that details the arrangement. Vague, hard-to-identify projects are not candidates for GoodWorks donations, according to the contract's provisions.

"GoodWorks will only make contributions to non-profits that agree to distribute donations toward identifiable, tangible enhancements within 12 months after the receipt of funds," according to information available on the company Internet web site.

Revenue distributions are listed on the site as well: "70 percent of GoodWorks donations will be made in support of education at the local level; the remainder of GoodWorks' charitable donations will be made in equal amounts to the areas of healthcare and safety."

"This is a different business model," Grochmal said. "With this contract that is enforceable, people can count on this [donations]."

Grochmal has vast experience in insurance and investments, and said that "20 years ago, this would never have occurred to me."

But a combination of factors, including becoming a father, realizing what he wanted for his children and conversations with his wife Ann, a Housatonic native who wanted to find ways to help the local area, led him to develop the innovative, unique business model.

"Insurance is historically a very profitable industry," he said.

From The Ground Up

Grochmal initially thought about purchasing an existing insurance company but once he devised the new plan, he decided to build the business from the ground up. The planning process covered about three years and included research, finding investors, and creating business plan details. Grochmal examined companies such as Newman's Own, Tom's Of Maine, and Ben and Jerry's for information and inspiration.

"This [idea] took a long time because of all that had to be done," Grochmal said. "I wanted to test the idea in the community."

Grochmal spent several months previewing the idea to about 25 area families, and found that the concept was welcomed as a pleasant surprise.

Since the insurance costs are about the same as what folks would pay at competing agencies, the "differentiator" was the contributions, and that was what folks found appealing, Grochmal said. Most of those who heard about the concept said that they would likely switch to the GoodWorks firm for insurance needs, he noted.

About 20 investors from the United States and Europe put up the funds needed to get the company off the ground, Grochmal said.

"Many of the investors were people who had experience in insurance, and they invested their own money," he said.

Other investors recognized the company as an engine for giving, he said.

A patent is being sought so that the strategy can be protected from unscrupulous individuals who might try to bend the structure to their own advantage.

"If we didn't have some control over the method..if other companies got hold of this and there was any fraud, it would reflect on us," Grochmal explained.

Grochmal said that he believes the marketing strategy could work with many other products and businesses and those who truly wish to act in a generous and giving manner are welcome to contact him and discuss their interest.

Personal, Commercial Services Offered

The business premise has drawn a "wonderful reaction" from industry leaders, and a number of insurance carriers have appointed GoodWorks to offer policies.

"That is almost unheard of for start-up [insurance] companies," he said.

Arbella Insurance Group, Chubb,Drive Insurance [offered by Progressive], Litchfield Mutual, National Grange Mutual, Patrons Insurance Group, St.Paul/Travelers, and The Hartford have authorized GoodWorks to make their products available to individuals, families, and businesses.

Personal insurance available through GoodWorks includes homeowners,motor vehicle, condominium, valuable item, mobile home, renters, flood, watercraft, and personal umbrella plans.

Commercial insurance options include worker's compensation, property and liability, business owners, builders risk, professional liability, employment practices liability, bonds, excessive liability, and directors and officers liability plans.

Policies may be written for anywhere in the Berkshires, he said, and noted that he has acquired some customers from the Springfield area as well as customers based in and around Great Barrington.

Growth Expected

Grochmal is interested in opening branch offices in other locales and hopes to open at least four new branches this year. Current plans call for branch openings in Connecticut [the company is headquartered in New Canaan, Conn.] and eastern New York.

Grochmal said he is interested in speaking those who have experience in the industry and an interest in his company.

Customer service and community service are company highlights but Grochmal's vision doesn't end there, he said. Company employees are eligible for "equity shares" of the company.

"We want to offer them something for their sweat equity," he said.

Grochmal noted that he he wants to launch all company branch offices as start-ups as opposed to buying existing agencies.

"We're looking for people who are experienced in the insurance industry," he said. "We aren't looking for companies but we want their employees."

Grochmal said he believes the concept has the potential to change the way the insurance industry is perceived and deliver significant contributions to communities.

"I think we might have an alternative distribution model for insurance," he said. "I believe that the plan is in the enlightened best interest of the consumer."

Additional information about GoodWorks Insurance LLC is available at a www.goodworksinsurance.com Internet web site, or by calling 413-528-5509 or toll-free at 888-528-5509.

Susan Bush may be reached via e-mail at suebush@iberkshires.com or at 802-823-9367.