九色

Over the last half-century as an insurance agency owner in south Florida, Tom Lynch has seen the ups and downs of the state’s property-casualty insurance market, from the rise of direct-to-consumer policies, to spiking premiums for homeowners and a statewide insurance crisis, to the flood of artificial intelligence in the industry. He’s also seen things from other perspectives鈥攁s a homeowner, mayor of Florida communities, and school board chairman.

This summer, Lynch was recognized by the Florida Association of Insurance Agents with the group’s Mitchell Stallings Lifetime Achievement Award. The semi-retired chairman emeritus of Plastridge Insurance agency spoke with 九色 about the award, his career in insurance, the changes at agencies, and his advice for others in the business. The interview has been lightly edited for clarity and brevity.

IJ: How did you get started in the insurance business?

TL: I graduated from Loyola College in Chicago in 1969. I majored in philosophy with a minor in psychology. My last year, I took education classes because I thought I would teach for a couple of years. I wasn’t sure what I wanted to do. So, I moved to Florida in 1971 and started teaching school. I did that for two years.

I couldn’t make enough money to be comfortable, so I started working part-time in insurance: Taking pictures of houses, measuring, working for an agency. It was a small agency, Plastridge Insurance, that was about 80% personal lines. Four people worked there at the time. I did that and liked it. Then the owner’s son came in.

So, I applied to a program at Northwestern University in Chicago and got accepted. It was for pre-med, advanced chemistry. It was pretty strenuous. I got accepted into medical school, for classes in August 1973. While waiting for that, I went to Florida Atlantic University and did chemistry to keep going until med school started, and I worked part-time in insurance. I had to make the money. All of a sudden, though, the son left the agency; he didn’t like it. And I had the chance to buy the company.

I knew I had no money to go medical school. And I actually liked the insurance business. So, I made a tough decision and decided I would buy the Plastridge agency. The owner took a note for a couple of years. Then I started on my CPCU (chartered property casualty underwriter certification). I figured I really needed to learn this stuff. And I just really did like it. It’s a rewarding business.

As grew to learn it, I tried to figure out why so many people hated insurance.

Most people in insurance don’t think, at age 15 or 18, that insurance is something they aspire to. Many people just buy insurance because they have to. So, I thought: ‘Why do they buy it from you?’ My philosophy was, they come to you because they trust you or feel you are knowledgeable, or both. So, two of the most important aspects are trust and knowledge. So that’s what I tried to spend my time building.

IJ: Tell me about Plastridge.

That was the name of the man who started the agency in 1919. It turned out to be a good move because it’s an innocuous name. After I bought the agency, I spent a lot of time developing personnel. We’ve had a lot of people who stayed with us for 25 or 30 years. Today, we have about 100 employees. It has worked out very well. In many cases, a mom will come to work for us and, a few years later, her daughter or son comes to work. It’s kind of a family thing.

IJ: You’ve certainly seen a lot of shifts in the Florida insurance market through the years. What’s the biggest change you’ve seen in your career?

The biggest change that everyone is worried about now is AI (artificial intelligence). I look at it a little bit differently. As I said, our agency in the early ’70s was predominantly personal lines. Sometime in the late 70s, Tom Johnson, (the executive vice president of FAIA, from 1948 to 1986, who died in 2005) gave a speech at the convention about how personal lines is going away. Progressive, State Farm, Allstate are cleaning independent agents’ clocks, he said.

So, here I was, a young guy, just got into the business; so I had to think about what do we do?

I started analyzing. A lot of the personal lines were going to direct writers because people try to save money, they don’t care about having a personal contact. But we decided that in the small town we were in (Delray), people wanted personal contact, so we weren’t going to go away. We were going to survive but we really had to build stronger agency and personal relationships, shopping coverages, getting people what they need. It all goes back to knowledge and honesty.

And then, we started to look at commercial lines. In the early ’80s, we got into commercial. And we started to write condominiums. Every lawyer wrote the condominium documents differently, so they were really getting confusing and difficult, such as what’s included in the unit coverage and what’s not. So, our agency started studying that, and we really became experts in it.

We started teaching classes for condo managers on insurance requirements and things like that. They still do it today. That was a good thing for us. So that sort of switched us from a residential to a commercial basis.

The other thing that helped us was in the mid-’80s, we started to computerize. Before that, just had electric typewriters. Really got into computers and used them to best of our ability. Then, I bought about 15 other agencies over the years and brought them into our company. We built a building in Boca Raton; so, we had an office in Delray, one in Boca, one in Coral Springs. We bought some land and built a building in Palm Beach Gardens and one in Stuart. At one time, we had five offices.

So as time progressed, so much space was taken up with files, paper files鈥攑robably 3,000 square feet. So eventually were able to put it on the cloud and store it. That meant we needed a generator and backup, so that during storms, we were operational when a lot of agencies were not. It worked out well for us.

IJ: You really thought things through, it sounds like.

Maybe because my early training was analytical, and it worked. Teaching helped me tremendously. When hiring people, you have to teach them, so there’s training on how you want them to treat customers and what you expect them to do.

While teaching junior high, I would bring in the Wall Street Journal on Fridays and the kids had $10,000 in play money to pick stocks. One kid I taught, he went to high school and got an air-conditioning degree. His company still handles all of our offices and our house, 50 years later. He said he would never be there if he hadn’t had those Friday sessions with the Wall Street Journal.

IJ: Do you have concerns about AI in insurance, how it’s going to affect agencies?

I don’t have a concern. I don’t think it’s going to take jobs away in our industry. It will make things more streamlined. People will learn how to use it. In many ways, it will make things better. But it will be challenging because customers will know more. They’re going to pull up AI and ask what they should be looking for, and it’s going to make them better consumers. As agents, we need to know more and explain more.

There will be times when it will make it more efficient, where you won’t need as many people. But I don’t think it’s going to make a major difference. People still want the personal touch. Especially when they’re first buying insurance and when they have a claim. They don’t want a machine.

IJ: How is Plastridge using AI now?

We use it to look things up, analyze contracts, things like that. We still have people in the office answering phones, so we haven’t gone AI on that route. We’re starting to use it to compare company quotes. There are programs now so that instead of going to each company for a quote, you can put in the information and it will analyze quotes and tell you the best price and coverage.

The way I see it, it’s only going to make things better. It will be a little more challenging. At the FAIA convention this year, I was in the audience and a person from Travelers got up and talked about independent agencies are writing more personal lines than the direct writers. That was the exact opposite of what they were saying was supposed to happen in the ’70s.

We now write for GEICO, Nationwide, Liberty Mutual鈥攁ll those companies that were direct and we couldn’t touch them as an independent agency, are now working with independent agents. It goes back to that original thought: that people want to deal with independent people who can help guide them and give them personal service.

IJ: In Florida, it seems like most consumers really need an agent.

Yes. Because of the wind and the flood, you really need an agent. Because if you don’t do it right, you’re really in trouble. You can see it up here in Asheville (North Carolina, where Lynch has a summer home): A lot of people didn’t have the right coverage and things are still not fixed; here we are going on two years (after Hurricane Helene flooding).

IJ; What’s your advice for young agents coming into the business these days?

Number one, you need to be honest. If you’re not, it will catch up with you quickly and your reputation stays with you forever. Number two, you’ve got to be knowledgeable. Be as knowledgeable as you can. Get the certificates and the degrees you need, the CPCU certification. It will help you in life. It’s not just about insurance; it’s about economics and business.

Third: Treat people like you’d like to be treated. If you’re running a company, you’re hiring people, so treat them with respect and be fair. You’ll build long-term, good relationships. I say this to people, but after 55 years, I really can say I’ve enjoyed it and like it. Not a lot of people can say that in today’s world.

ij: You and most agents in Florida walked through fire a few years ago, during the height of the insurance crisis, with the carrier insolvencies and rates going up so much. Did you hear a lot of grief from policyholders during that time?

Yes. I mean, you always hear it when rates go up a lot. With single-digit increases, people sort of expect it with inflation. But when they start getting 20% to 30% increases, it’s the worst time in our business, when rates go way up鈥攁nd when they go way down. It sounds odd to say that, but when rates go way down, agents who aren’t ethical or knowledgeable come in and say, ‘I can beat that price.’ Price becomes the goal and they come in 20% lower. And the customer says, ‘This is great. My previous agent must not have been doing a good job when the world changed.’ They don’t get into the coverage that people really need.

It’s a hard time, so your friends and best customers are saying, ‘What’s wrong? I didn’t do anything wrong or have any accidents or anything.’ It makes our industry look bad. It’s the law of numbers. A lot of people don’t understand how reinsurance works.

Insurance companies do stupid things, I will say that. If a customer hasn’t had any claims, they still may pay more for reinsurance. But you don’t have to have a carte-blanche 25% increase on everybody. Take care of the good customers, give them the rates they deserve. For those that do have a lot of claims, they deserve the higher rates.

IJ: Are you seeing that at all in the business? Is anyone tailoring rates more for policyholders?

Right now, everything is going down, down, down. Everyone thinks that’s wonderful. But what they don’t realize is it’s only for a short period, because of the market, and it will be right back up. From a consumer basis, my theory is that companies would be so much smarter to try and be more stable: If it goes down 5%, fine, but put some money aside so that when reinsurance rates change, you won’t go nuts and raise premiums 25%.

A lot of insurance (regulatory) departments won’t do that. They say, if your reinsurance costs are lower, then you have to lower your rates. So, many times it becomes a game that is governed by government.

IJ: There does seem to be pressure on state regulators around the country to follow that model.

And some regulators are foolish and say we’re going to take rates down to the bottom. Well, we all know what that does: It takes about 18 months and your losses exceed and you’re raising rates and dropping policies. It makes the industry look bad when you start dropping policies. Get in and do it the right way.

IJ: The Florida Legislature enacted major reforms in 2022, which have had a real impact on the Florida market. What else needs to be done?

Those reforms really were good. The amount of change is incredible. Look at the statistics. It’s a lot like what happened when they took some of the lawsuits out of workers’ comp (the 2003 reforms): The rates have gone down about 70% since then. People get injured, they get paid. What that does is create a chain effect: More and more companies came to Florida because it’s a good state to do business in.

So I’d just like to see us as a state get away from all the legal ads on TV, about winning $7 million for a client in a case, and all that.

And customers have to be more responsible for themselves. I believe in convincing people to take high deductibles. If you do have a loss, then you’re going to pay part of it. But hopefully, you won’t have a loss every year, so in the long term, you’ll come out ahead. And that will make you more responsible: If I need to put in new windows, or get my car’s brakes fixed, or new tires, I should do it, because otherwise, if a loss happens, I’m going to pay part of it.

IJ: Any other words of wisdom you’d like to offer?

Insurance is a good business to go into. There are a lot of variety in insurance jobs. But it’s a very rewarding field. I’m really lucky that my two sons are in the business and they really enjoy it.

Top photo: Lynch accepting the lifetime achievement award at the FAIA convention in June. From left: Chris Heidrick, chair of the FAIA Board; Tom Lynch, Plastridge Insurance chairman emeritus; Connor Lynch, Plastridge Insurance CEO; Kyle Ulrich, FAIA President and CEO (Courtesy of Plastridge Insurance/FAIA)

Topics Florida Agencies