Whenever it is made mention of the independent insurance agents in Massachusetts, often that immediately conjures up the image of the independent urban or suburban agent of the Greater Boston Area. One of the great strengths of the independent insurance agency system here in the Commonwealth, however, is not only the number, but the great variety of types of independent insurance agencies that thrive here in the Bay State.
One such example is the Tashmoo Insurance Agency. Founded as a scratch agency on Martha’s Vineyard in the 1990’s, owner and independent agent Joe Gervais The agency which sells mainly personal lines and mainly on Martha’s Vineyard has not only been able to survive doing so, but thrive. Through hard work and building long lasting relationships with his clients, he has not only survived on the island, but thrived with a staff of eight and two office locations in Edgartown and Vineyard Haven. Mr. Gervais was kind enough to share his story and insights with the rest of the mainlanders in the Massachusetts insurance industry here.
How did you first get into the insurance business?
I was starving. There was a recession. The year was 1992. I answered an ad in the Boston Globe for a general sales position, and it was a company that sold individual health insurance policies.
Have you lived on Martha’s Vineyard all your life?
No. My father bought a business here when I was in college.
Where were you from originally?
A small town between Buffalo and Rochester.
How long did you sell health insurance for?
About four years.
When you started in the health business, where did you start? In Boston?
No, I was here. The company furnished leads, and I did keep a car in on Cape Cod so that I could drive to prospects in the mainland, but I wound up, as time went on, just becoming much more local.
How did you transition from selling Health to Property & Casualty Insurance?
I was selling insurance here on the Vineyard, and I wound up developing a very strong following of clients on Nantucket. I would be on Nantucket about three times a month. Then I started working with an established property and casualty agency there.
One day the owner just said to me, “You know, the concept of insurance, you do not want to sell somebody one line. You want to sell them all lines of insurance.” He then said, “The reason why I work with you is I do not have anybody who sells health insurance, but you should look into getting yourself licenses so you can sell property and casualty.”
So, I took his advice, and as I started to be able to insure people’s houses and cars and businesses, I found I did not have to go to Nantucket anymore because I had enough business to keep me busy on the Vineyard.
Maybe a year or two later, there was a Cape based agency that had a small block of Vineyard business which I purchased from them.
What was the name of the agency?
The Bouchie Agency. It was a small book that was earning, I think, about $40,000 worth of commission, which meant that they really could not afford to rent an office and pay an employee to be in it. Bob Bouchie now says, “It was a large book of business sold at a small price. It became the beginning of long-running friendship”.
What happened next?
When I bought that block of business, I moved my office which was in second story location down to a first story location where they had theirs.
From that point forward, things moved very quickly. The location had an awful lot of exposure. It was also right around Y2K, and we were experiencing a great deal of influx of Brazilian immigrants, and it did not take me long to figure out that they were not getting treated very well at the other insurance agencies. So I learned how to sell auto insurance in Portuguese.
Did you already speak Portuguese?
I did not have any previous Portuguese experience. I became known as the most famous American in the Brazilian community here. I wound up hiring a Brazilian woman as my first full-time employee. Initially, they did not want to deal with her. I was perplexed but, the Brazilians told me that I was very entertaining. So that worked out very well.
How big is your agency now?
We have eight people who work here, myself included. We offer all lines of property and casualty insurance. Oddly enough, the shift into P&C was very fortuitous because the commission structure for health insurance became very poor. We now have very little health insurance in the current mix.
What companies do you represent?
MetLife, Safety Insurance, Safeco; National Grange Mutual & Amercian-European…because I joined the Iroquois Group about two years ago.
Iroquois is very helpful in a coastal agent situation because they enable you to get an agency appointment with a much lower threshold than you could get by yourself. I also have an appointment with Plymouth Rock & Progressive for Commercial Auto.
What about your other commercial business?
Well, the commercial property is almost exclusively into the surplus lines market.
Is that because you are based down in Martha’s Vineyard?
What is the actual population of Martha’s Vineyard?
What does it swell to during the summer on average?
If you were here for July 4th, you would be here among 100,000 people.
How have you, as a local agency, dealt with this unique market situation?
The growth of the agency has always been strong because of just the personal relationship with the people. People are going to need insurance whether it is going to come from the standard market, the Fair Plan, or whether it is going to come from the surplus lines market. We have cultivated the relationship with several good surplus lines agencies that have been able to provide us steady policy service, steady pricing, and that is what keeps your clientele happy.
In the summertime we get an awful lot of walk-in business because people are relaxed because they are here at their second home and they want to talk to their agent, so we try to hire at least two college interns every summer.
What do you see as the major differences between an agency like yours, located in a summer community that is insular in the truest sense of the word, as opposed to a main-street agency in Massachusetts inland?
We are going to make our money selling property insurance. We are going to make very little selling automobile insurance.
The highest speed limit in this community is 45 miles an hour. You can imagine that we do not get a whole lot of accidents because of that. Even with the rate having gone to managed competition 11 years ago in the personal auto market, the loss ratios here are still very favorable for personal auto. But, it takes an awful lot of auto policies to be able to support somebody, meaning support one of my employees. So we have to bring in the revenue where it is, and the premiums are higher for property out here, and that is where we make our money.
Construction has also been—It is also very cyclical meaning ten years ago we had a recession and some of my builders who generally do $5 million worth of construction in a year, at that time, did not have anything to do. That sector of the economy changes greatly.
So, where is it now?
Right now, the construction business is going at full tilt. We have no hint of any recession coming along and accordingly, there’s a labor shortage here because of that, and there usually is not.
What do you ascribe to your success in building an agency from scratch with a small purchase, but basically from scratch to its present size which is approximately… $5 to 6 million?
A little more than that. I do not want to say the exact amount. That question was asked of me when I bought my first office building. The banker looked at my tax return and said, ‘You have had a very healthy increase in your business over the last couple of years. To what do you ascribe it?’ I said, ‘It is a philosophy that if you want to work hard, everything is easy. If you want to take things easy, everything becomes hard.’
There’s not one thing I can attribute to my success, but it is the attitude that we are going to make things work and my company is going to be the best it possibly can be. We are going to treat other people the way we want to be treated.
That is what is amounts to is if you are going to go out and try new things, some are going to work, and some are not, but if you keep taking your chances with new things, you are going to always be innovating, and things are going to work out pretty well for you.
Speaking of innovating, you mentioned before this interview that your agency also offers its own product that you had put together for homeowners. Could you talk a little bit about that and how it came about?
Sure. We started working with a surplus lines house out of Louisville. It is called Market Finders Insurance Company. The owner was well aware of what had happened to the Cape Cod and Islands property insurance market because he owned a home in Hyannis. He had one of his people out talking to agencies, and I said, ‘I would be very interested in talking with him.’
At the time, the salesperson said that very few people want to talk. I said, ‘Put together product. It is got to have a couple of features that I designated,’ and I said, ‘You have got to have installment billing if you are going to compete with the Mass Fair Plan because right now they’ve got 80% of the market.’
So they agreed to come up with an installment on their product. Initially, the billing was a disaster both for my agency and the surplus lines house because we just were not used to doing monthly payments. I said, ‘We are just not going to do monthly paper bills anymore. If you want installment billing, it is got to be a monthly automatic bank draft.’ Once we made that change, the program worked well.
What does it offer?
A standard HO-3, but in this community, you needed to have coverage for the other structures. Guest houses are very common on Martha’s Vineyard, both as rented units and both as just additional units for other family members. You have got to have ordinance and law. Coastal building codes have changed dramatically, and your policy has to be ready to pay for those changes.
When did you first start working with this excess and surplus product?
This product was started in 2007.
And are you still selling it?
You bet. This particular program probably has, just in my agency, about $1.7 million worth of volume in it. It is also sold by other agencies outside of Martha’s Vineyard.
Do you have the exclusive in Martha’s Vineyard?
Yes, I do. We have seen other people try and penetrate the marketplace here. The Swyfft product looked very interesting in a couple of respects, but they did not have ordinance and law, so I was not going to sell it. (Swyfft changed this at the beginning of May).
There are other companies that do try to sell out here, but they may not have “A” rated paper, and that is not a product that I am going to sell either.
The coastal market is so complex, and obviously, there are a lot of different opinions out there about the Fair Plan. What is your experience with it?
Well, the Fair Plan has changed dramatically over the last 20 years in terms of the number of people who work for them, their attitude toward customer service, and ease of doing business with agencies, all of which has been for the better. They have made a lot of changes to their products, which also is very helpful. For some people, they are the best product in the marketplace. Other places, we should put the client with somebody else.
I like the people at the Fair Plan. Many of them, when I call customer service, I know who they are even before they tell me their name. All they have to say is, “Hello,” and I recognize their voice.
What have been the improvements for the better that you have seen over the last 20 years at the Fair Plan?
I would say installment billing, website access, and more endorsements. We used to have to fax applications in like you did for any company, but now you can check the billing on the website. For a state-chartered corporation that is not obligated to turn a profit, they do a very good job modernizing themselves.
Concerning the Fair Plan, is there anything you think in terms of what any other agents should know about it dealing with it? You know the people’s names. They sometimes get a bad rap, I think. But, it seems like you have had a good experience with them.
Yes. At one point, the Fair Plan was the only marketplace out here for my agency. They were great. I think the agents who were unhappy with them were the ones who deal with them only very periodically and it is for their properties that nobody else wants anyway.
So, if you have got a poorly maintained building and you are disappointed that the insurer of last resort says, “Fix A, B, and C, it just makes things frustrating.” I have got a feeling they should just go back to their client and say, “Your risk is not insurable in its present condition.”
I feel that when the Fair Plan comes with their inspection list that says, “Fix these items,” I find them very easy to work with. You just tell them, give the person two months or, let’s say the roof needs to be fixed and it is December, you tell them, “We’ll get the roof fixed as soon as the weather permits.”
Okay. Are there any coverages they do not offer that you place through the excess market?
Right now, they do not offer $1 million in liability for their summer rental homes. I would expect they will probably catch up with that within the next year. That is unfortunate. You are aware that that is one of the requirements of the state’s short-term rental law.
Yes, we wrote something about that as well as what was going to be my next question: What do you see as the impact of the short-term rental law that takes effect July 1?
Okay. You are going to see a lot of people who own homes here are going to see their income decreased because of the amount—Because with the tax, the renter is going to be willing to pay the same amount, so I am sure that rental income will drop for many people.
We also see a very interesting political situation here, in that many of the towns have different factions that are very eager to get their hands on the new rental money or the new tax money. We will be deciding that over the next couple of months what will be happening with that.
How about the insurance aspects of it? You had written a comment on our blog I believe?
That is right. When that legislation was written, it said that the landlord would have to carry a policy that will indemnify both the landlord and the tenant. The standard policies we sell do not indemnify the tenant. They are only concerned about the owner of the policy, the landlord.
I brought that up with the Mass Agents Association, and they had written me back on two occasions to say that, ‘We are trying to get an opinion out of the Division of Insurance that a standard insurance policy will satisfy that.’ I have not gotten any definitive thing on it [yet].
Do you see any movement for that issue being resolved by any endorsements or specialized coverage?
I had talked to several people that I thought might be able to provide that product initially and all of them said no.
What do you see as a reluctance to write that product?
I think ISO does not have any product that has that language on it.
I was just wondering if there was any separate type of short-term rental contract that was out there that might satisfy the insurance obligation.
None to my knowledge.
So what do you think is going to happen?
At the moment, the state has no enforcement of this law, so we are going to wait and see. We are insuring as many people as we can with the $1 million, and that is all that is available at the moment.
My hope is that we will get some opinion or modification to the law that says the standard homeowner policy indemnifies the landlord is fine.
If you were able to ask a question to the Division of Insurance or say something to them about this issue, what would you say?
I would ask them to go back to the Legislature and have somebody write something to be tacked onto any piece of legislation just saying that we are not going to require the owners or managers of short-term rentals to indemnify the tenant.
The issue is not that they are not going to indemnify them. They can do that by a contract. The issue is that they are supposed to buy insurance that covers them and that insurance is unavailable. Basically, it sounds like come July 1st. we are going to see unintended consequences if people cannot get the right insurance.
That is exactly what it is, unintended consequences.
Well, it is obviously a problem looking for an insurance solution.
Maybe somebody’s going to make some money putting together some type of overriding endorsement above and beyond the underlying coverage providing just tenant coverage. It is almost like a bridge policy.
Again, being on Martha’s Vineyard, you probably deal with a lot more claims and damage from wind storms more than others. Do you have any thoughts you would like to share on how you deal with the aftermath?
When the storms come in, we take care of them. The March 2nd storm of last year, we saw a good amount of damage, but that is what insurance is for on the plus side. We recorded a wind that was over 70 miles an hour that night. That is the first time we have had wind over 70 miles an hour since Hurricane Bob in 1991.
That is interesting… Any other facts like that?
Well, when you are talking about coastal exposure, which is something I always talk about with both my standard and surplus lines companies, I say, ‘The last hurricane to reach New England was Hurricane Bob.’ When a hurricane comes up the coast, it is very different by the time it gets to New England because we are only dealing with a 70–some mile-per-hour wind versus what you are dealing with if it is in Florida or the Carolina’s or further South. It is a much stronger storm.
From all your experiences dealing with storms or damage over the years, have you set up a certain protocol for handling things?
Yes. Both of my offices are set up with very large battery packs that they can operate for several hours without electricity. I had looked at generators, but I find generators to be much more trouble than they are worth. If we were without power for several days, I have a generator I can bring from home. Everything is set up; everything is ready for action. An insurance agency has to be ready to perform when they are needed, just like every insurance policy. You just get yourself ready and be prepared… just like they taught you when you were a Boy Scout.
What do you see on the need for products for your type of coastal exposures that we have not already talked about, like the short term rental or anything else out there where you see either an opportunity or a risk for agents?
No, I do not. From time to time, I have had people say, “Would you like to have a buy-down product for wind exposure?” I just have not seen many homeowners that really are too concerned about the wind deductibles on their policies.
Actually, I will tell you there is some frustration in dealing with insurance companies for businesses that rent their buildings. We often run into problems that they do not want to cover a large amount of contents. I just find that poor underwriting. I look at anything inside a building as pretty safe from a storm.
What about flood insurance? Do you have any thoughts on that?
Well, it is been very nice. We have private companies into the marketplace and there’s an awful lot of things that can happen now and I really enjoy the fact that people just come to us and say, “This flood insurance is so much money,” and you look at it and you say, “Alright. I can get the job done and save you 30%.”
That is with private flood insurance?
Where do you see the Tashmoo Insurance Agency heading over the next five to 10 years?
I see that I will be content with my two locations on Martha’s Vineyard. Each one will grow. Generally, growth has been in the range between 10 and 15% per year. I would say the major challenges as having the right personnel. My mainland counterparts can get people to commute from a longer distance away. I have to deal with people who are here. I already have a remote accountant to do a lot of my bookkeeping. I have tried some other people to do things remotely, but they really have not worked out that well. But growth depends on finding the right people and making sure they stay with you.
How old are you now?
I will turn 58 next month.
Have you thought about the perpetuation of your agency?
Well, I plan to be here until I am 65 and I have one of my employees who is interested in the business. We are trying to work out the details.
So, you are at least thinking about it.
Getting a summer clientele of people from all different walks of life, you must have some interesting anecdotes? Do you have any interesting insurance stories with that respect that you wanted to share?
One of my big supporters is a real estate agent up the road. She calls me the last time we had a tropical storm coming in which was probably four years ago and she says, “What are you doing?” I said, “I’m going home to read my favorite novel, ‘Gone With the Wind.'” We just have a lot of fun at our agency.
I have a lot of local antiques on the wall here. I actually have my clients bring me really nice antiques.
What kind of antiques?
There is a large farm which was developed into old money housing probably 100 years ago. To give you an idea, one of the people, and this is when I was working with my father, I was working on a house up there, got a very unique name. A couple of years later, I am watching a documentary on building the Transcontinental Railroad. They say that the people in Washington are very disappointed with the progress for the railroad going west from Missouri, so President Lincoln fired the person in charge and hired a wealthy abolitionist from Boston. This person had the same name as the man on this farm up in West Tisbury.
About two years ago, somebody came in with a scythe. It was used on that farm by one of my clients’ grandparents. So that is now hanging on the wall.
Another client came in with an old carpenters level he just happened to see in New Bedford and said, “Joe would like that.” Another man came in with a box of license plates he found at the dump. Most of them were dated, Massachusetts plates, dated in the ’30s and ’40s. They are hanging on my wall too. Another client had a marriage that did not work out in California, so he gave me his California license plate with a purple heart on it. I have a lot of things that people ask about when they look on the wall. Oh, and I have a lobster trap too. A friend and I were just walking along the shore one winter day, and a trap had washed ashore, so we brought it back to the office and hung it on the wall.
What would you be down in Martha’s Vineyard or down the Cape without a lobster trap, huh?
You got that right.
Thanks a lot for your time and for sharing your story with our readers.