Bob Dowling, of The Dowling Insurance Agency, has spent more than 50 years in the insurance business. The first 29 as a company man for Kemper Insurance and then another 28 (and counting) as the President and Owner of The Dowling Insurance Agency, A Five Star Agency in Braintree, MA. Agency Checklists met with Mr. Dowling last week to just listen and learn from a master. Here’s what he had to say…
Let’s talk about how you first got into the insurance business.
I met a gentleman once, actually, it was playing golf, it wasn’t a meeting, and he suggested that I take a course in insurance with a fellow named Bob Dallas at BU [Boston University.] It was an evening course which I took, because at the time I was working at Raytheon.
The course just hit me right, the way he taught it. So, I applied for a job with Kemper Insurance back in 1954, received a job in underwriting, spent 29 years there and eventually ended up as the branch manager in Quincy responsible for five states and about 600 people.
So what happened? Why did you leave?
I decided to leave because there was a definite shift in the philosophical thinking of Kemper Insurance in my opinion. In their dealing with agents, it bothered me enough that they took some action in Rhode Island, they withdrew from the state and I was opposed to that strongly. I let them know it and after I let them know it I said you know, I’d better leave here. And, I went out one day and bought a little insurance agency with two people in it. That was in 1983.
You just literally went out and bought an agency on the spot?
Well, I knew the principal of the agency was a fellow named Karl Johnson who himself had worked for Kemper Insurance some 30 years earlier. And I just got to know him from visiting his agency once in a while and playing golf with him a few times. And I just dropped by one day and had lunch with him and said to him if you’re ever thinking of selling your business let me have the opportunity to buy it and I bought it that evening.
Yes really. A lunch turned into an afternoon affair, we discussed the agency, he told me what he wanted for a price, I agreed to pay it and we shook hands. Then, Owen [Owen Gallagher, founder of Agency Checklists] wrote up the agreement and that’s how I got in the business.
That must have been a big change for you.
It was. I can remember my first day in the agency with the two CSR customer service reps and myself. That same night I was emptying the rubbish into the dumpster outside and I said to myself have you made the right decision? Last Friday when you left you had 600 people working for you, you didn’t even know where the rubbish was. But, it turned out to be the right decision although it was a pretty risky transition.
How big was your agency when you bought it?
The volume then was $600,000 in premium.
Today it’s, let’s round it to $20 million.
It’s grown a bit hasn’t it.
Yeah it’s been a long time and a lot of people have added to that growth. I also acquired a number of small agents and we’ve grown quite a bit with the four really good sales people we have, who have done a good job.
You’re 78 now, how have you dealt with an issue most agents don’t want to talk about – Agency Perpetuation.
I recognized the need for agency perpetuation the first day my son came into the business and I knew he was here to stay. I could see he liked the business and so, after three or four years when I was convinced that he was here for the long run, I started gifting him the business up to the limit I’m allowed by the IRS.
That’s very forward thinking. I mean so many people by the time they get to a point in their life when they are thinking about retiring it’s often impossible for the children to by the agency.
Well, I saw an example when I was working at Kemper. A field man that we hired, he was the son of an agent who had worked with his father in the agency for 20 years. When his father died the value of the agency and the fact that there was no perpetuation plan and none of his other siblings were in the business made it impossible for him to buy the agency. The others were entitled to 25 percent each, so he would have had to pay them off and then pay the taxes on it, and just the implications of the taxes alone made it impossible for him to buy the agency. So they sold the agency to an outsider, split the proceeds after taxes and he went to work for Kemper. It was a big disappointment to him because he had spent 20 years working with his father and because of no perpetuation plan the agency went out of the family.
So that taught me early on, that was a lesson that you should be thinking about this issue early and I did. I started my plan at a young age and because I have lived a long time, I’m 78, it’s helped me even more, it’s given me an extra 10 or 12 years to gift it away my ownership which is limited to $12,000 or $13,000 a year for a person. My wife and I both gift so we’re able to double that and we gifted that to our daughter also. So for a period of over 20 years I’ve been gifting them the maximum amount I could to make the transition easier and during the same periods of time I’ve sold them stock so that at this point in the ballgame I have very little ownership in the agency.
So how is the family dynamic in the office? I believe you now have three children working with you, correct?
Yes. My son Paul is now the president of the agency and runs the day-to-day operations.
And your daughter?
And Kathy is in Virginia, however, she does all of our processing work. We send it down to her every week. She worked in the agency for a number of years but she’s a horse girl and a horse trainer. So she decided to follow her bliss down in Virginia where she trains horses and has a horse farm.
So she gets to have the best of both worlds.
Yes she does. Even though she’s down there what she does, the CSRs who work with her just say, it’s not my evaluation it’s theirs, but they’d be lost without her.
And that’s the beauty of technology, isn’t it?
That’s technology in action. Otherwise it couldn’t be possible.
And your oldest son? He has returned to flock.
Yes, my oldest son Bobby has been in the construction business since he graduated from college as a project foreman. He first came into the agency for about three weeks and hated every bit of it. So he went in to what he loved. For the last five years, however, my son Paul has been trying to convince him to come back into the business. It’ll be a year next month he came into the business after spending a successful time in construction with a good company and and it’s been a very favorable transition up to this point.
So in looking back, what do you think has been the secret of your success?
The secret of my success, if you call it success, is product knowledge and hard work. I felt I always knew as much about the business at least as much about the business as my competition. And while I wasn’t a great salesman I figured I could outwork anyone.
It might also stem from your encyclopedic knowledge of insurance – exactly how many insurance periodicals do you still read weekly?
I read every insurance publication I think there is, all the popular ones at least – about nine of them. From The Standard which is just, you know, current news to Rough Notes magazine to the Agent and Broker, to the Underwriter, to all the John Liner newsletters. And there’s two or three other quarterly or monthly insurance periodicals too that I read.
And then I believe you said that you then disseminate that information out to your office?
I’m like the proofreader and distributor for the office. That way people can spend more time doing what they do best and I can help them read things that I think are more pertinent to their responsibilities.
And so who does your agency represent?
We represent most of the major companies Arbella, Commerce, Andover, Quincy, Travelers, The Hartford, Selective, Utica and New London County which was formerly the Hingham. We also are a part of Iroquois which is an insurance group.
A lot of agents are interested in knowing what other agents consider which companies to be the most agent-friendly?
I find the bigger you are with the companies they friendlier they are with you. The more volume you give them the friendlier they get. But, there’s no question that the regional companies because of their geography, their location and their size are friendlier than the national carriers. You know, for example at the Arbellas and the Quincys and the Commerces and the Andovers I know the executives of all four of those companies reasonably well. I don’t know the executives of any of the national carriers. I don’t know one. That’s just because of the location and the size. As a result, with the regional companies, there’s no question they are friendlier companies to most agents, in my opinion.
Speaking of local versus national, let’s talk about the Massachusetts market and in particular managed competition. Good, Bad, Jury still out?
Managed competition has done a number of things to agents. It’s thinned out the agency ranks by its very nature because of the competition. It’s also reduced automobile premiums which in turn has reduced commissions. It’s created a lot more work, a lot more quoting that has to be done.
There’s also a lot more quoting, just within the agency, for example, in comparing auto carriers and when you combine the auto with the homeowners. You want to make sure that you’re giving your policyholders the best value and so you just can’t renew like you used to because everyone had the same rates. You’ve got to evaluate it, see how long they’ve been with the carrier, what their record is and determine whether you should move the account or leave it.
So it’s created a lot more work within the agency and for the CSRs more than anyone else. It’s also created a substantial loss of income for the average agent in Massachusetts because rates have been driven down. The direct writers also have had some success and there’s some loss of business from them and those two combined have created problems for agents.
It [managed competition] also in the long run will affect profit sharing because when the rates are reduced, there’s less profits and there’s less profit sharing that agents are going to receive.
How has the switch to managed competition affected the industry and your business?
I think there’s been a definite impact but, in my mind, I believe, it’s made the good agents stronger, tougher and more resilient. They aren’t lying down. They’re fighting back and keeping their business. So, I think the agent that works at it will continue to survive.
What about technology? Do you think that can even the playing field for agents against say, the direct writers coming into the Commonwealth?
Yes, technology can even the playing field to a degree because it gives the agent more opportunity to sell. There’s less time he’s spending on paperwork or just with the rating, et cetera. So, it is important as the Progressives and GEICOs sell most of their business through direct response. While some young people like that because they’re used to that type of everyday activity of buying consumer goods on-line, I think, personally, it’s something you have to be careful about because buying insurance is not like buying razor blades.
You need some guidance and while there’s many people out there can do it well on their own, I think the majority of the people can make some serious mistakes. We’re seeing this with our own insureds that have left us and gone to direct response companies. They’ve come back a year later and found out that they didn’t realize they had a $500.00 deductible on glass and they didn’t have other coverages they thought they had.
And so I just think that if you’re going to go to a direct response company you better have some knowledge of insurance and what you need and what you had before and what you should have in the future. There’s no such thing as a price gun where you say I want to spend $200.00 and you’re going to get a good policy. That looks good on TV but, it’s not good in the real world.
Do you have any advice for agents out there reading this interview?
I would say that on agency perpetuation if you’re fortunate enough to have a son or daughter come into the business then think about it right away because it’s never too early to start preparing, especially if you think they’re the right person to follow in your footsteps. And the reason that I think three of my four children are in the business is because I’ve always loved coming to work. I always loved being here, I enjoyed it and when I went home I think I expressed that to them. All of them eventually came in the business because they knew it was a happy place to be. It was a place where you worked hard, but you were rewarded and you enjoyed yourself. It was a challenge. It was not a bore. I’ve never had a boring day here.
That’s nice to hear, I think insurance agents so often get a bad rap. And as a result, young people are not entering this industry.
I agree 100 percent. I think people think of the insurance business as being underpaid, overworked and to some degree backwards, with the shades and the old pen and that it’s not modern enough and so forth. But, in reality, this business has come into its own in the last 20 years and it’s an exciting business and any young person that gets into it I think most of them would enjoy it very much. It also exposes you to so much more than insurance. You’re not just in contact with your policyholders. You have experiences on a regular basis that you don’t get in big business in a big company.
What would you like to see more of in the Massachusetts insurance industry?
We need more companies being involved in education and training. And whether they’re a regional company or they’re a national company I think they should be more geared toward providing the agency system more education and more training. The only ones that do the training right now are the associations but, I’d love to see more things put on by the companies themselves for the agents. Some companies do a little bit of it but by in large most companies ignore it completely.
Any advice for young people thinking about a career as an independent agent?
I think from an agency point of view, I didn’t do this, but, if I had my druthers I would have had all my kids work three or four years with an insurance company before entering the agency.
Why? Is it a completely different mindset?
It’s completely different. With my children for example, because I worked so long in an insurance company, I’ve been able to explain to them some of the difficulties and problems that company people have and why they don’t move as rapidly as agents would like them to move.
When you come in and work for an agency you’re looking in one direction. You really don’t see the other side of the problem that the company people have. We agents are smaller, we can move more rapidly, we can adjust more rapidly. Companies are big battleships that move slowly. But, there’s reasons for that. You get to know much more about the business than you ever would by just coming directly into an agency.
So in your opinion how can an insurance company better respond to an agent’s needs?
For example, the new coverage that’s coming out right now is cyber liability. I know there is probably not three agents in the Commonwealth of Massachusetts that really understand what it is. I mean they know what the coverage is but do they really know and understand the policy?
I’ve sold a couple of these and I’m not comfortable selling it because I know a little bit more than the fellow that’s buying it or the girl that’s buying it or the company that’s buying it but what I need is a real session in going through this thing with the company, having them show the coverages, what’s needed, how you evaluate the exposures, the limit that you should have. Every two or three months there’s a new policy that comes out that you’ve never heard about and we’re out selling these things and in my opinion there should be more training rather than just coming out with new products.
And I think that that’s important. Old-fashioned sales training, that’s still available but, you can’t go to companies and get the training like you used to. Years ago Travelers and Hartford and Kemper, they all had schools that you could go to for training in sales techniques and coverages but now very few companies do that. Actually, I don’t know of any companies that do that now. I think there’s a big need for agency companies to provide agents with the opportunity to gain knowledge.
So what’s your outlook on the state of the independent agent system in Massachusetts? Are you worried for agents?
No, not about agents. I do think direct writers are going to be a factor. They’re going to take a bigger share of personal lines business than they have in the past because they’re now in here and they’ve made it easier for them to operate in the state. So, just by the very power of advertising they’re going to take a substantial share of business but, the agents that I know are tough and strong and I think they’ll still maintain the majority of the business even 10-15 years from now and we’ll be one of the few states where the agency system still controls more than 50 percent of the business.
We have probably 40 percent less agents today than we had ten years ago in this state. And I believe we’ll probably have 20 percent less agents in ten years than we have today because of mergers and consolidations. Also, some agents haven’t prepared a perpetuation plan and so when they get to be 65 or 70 they’re just going to sell out and be merged into another agency. The agent today, however, compared to the agent just 20 years ago is so much more professional it’s unbelievable. My competition out there, the people I compete with, they are very professional, they’re very knowledgeable. It’s very rarely I run into an agency that I say oh this is so and so I’ll have no problem taking this away. At one time I felt like we had a big advantage. Now we’re out there just slugging our way out just like the Bruins in the NHL. There are no amateurs. They’re all pros.