After 55 Years in Florida Insurance, Tom Lynch Reflects on Agencies, Changes Needed

He almost became a doctor. But he decided at the last minute to buy an insurance agency in south Florida. A half-century later, Tom Lynch, the semi-retired chairman emeritus of Plastridge Insurance agency, sat down with Insurance Journal and reflected on the ups and downs of the state’s property-casualty insurance market, changes at agencies, and his advice for others in the business.

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.

The other thing that helped us was in the mid-’80s, we started to computerize. Before that, just had electric typewriters. Then, I bought about 15 other agencies over the years and brought them into our company. At one time, we had five offices.

So as time progressed, so much space was taken up with files, paper files–probably 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: 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.

IJ: You and most agents in Florida walked through fire during 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–and 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, ‘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.

What people don’t realize is rates go down only for a short period.