Family Ties to Main Street

Buying out your parents in your family-run agency? Check. Making relationships with siblings and in-laws work to run a business? Check. Trying to grow a small town, Main Street agency in a difficult economy? Check.

New Big “I” Chairman Mike Donohoe has been in your shoes. He understands the dynamics of family businesses and small towns—and brings that perspective to his role as chairman.

“Family business is not easy,” Donohoe says. “But [my experience] gives me insight into what happens to agencies our size in small towns—I’ve lived it. And it’s prepared me well for my role as chairman.”

The Early Years
Donohoe comes from an insurance family: His father was a senior vice president for an insurance company and his father-in-law was an independent agent, giving him an interesting perspective on both sides of the industry. But he quickly learned his family ties weren’t an automatic ticket for a job. Fresh out of college, Donohoe kept running into the “two year rule,” even among family members in the industry. “The mindset in the business was that you needed two years of experience before anyone would hire you,” Donohoe says.

He cold called every insurance company in Minneapolis looking for an opportunity. When he was hired on the life side of the industry by Aetna, Donohoe admits he knew during his training that he had picked the wrong job and left. His sights set on property-casualty work, Donohoe’s father-in-law introduced him to another independent agent who offered to hire him if he went to work for a p-c carrier first. Donohoe agreed, going to work for Continental in their property underwriting department with the promise of moving over to the carrier’s career training program when a position opened up. When the company hired another person in that position a year later—the job Donohoe really wanted—he had enough. “I quit and had nowhere to go,” he says. “So I called my father-in-law and said I didn’t make it two years, but I made it 14 months.”

So he moved to Mankato, Minn., to work at Commerce Insurance Agency, his father-in-law’s firm. That was in 1975—and he hasn’t looked back.

The Birth of an Agency
Donohoe wasn’t in the agency ranks for long before he faced a familiar dilemma for independent agents: agency perpetuation and the prospect of being sold. He had been at the agency three years when the farming crisis hit. The owners of his agency also owned banks and got into financial trouble—and rumors started flying that the agency was going to be sold. “Before that happened, we went to owners and said we [wanted] to buy the agency,” Donohoe says. “That’s when the James R. Weir agency formed; that’s when I became a partner.”

Donohoe was the president of the agency when his father-in-law retired and continues on as chairman of the board today working beside his brothers-in-law. He says his experience in a small-town family agency helps him relate to the challenges many Big “I” members face. “I know what it means to try to buy mom and dad out, to split off from a sibling,” Donohoe says. “My experience has prepared me well. I love the work that I do—and I really like the fact that I can help somebody.”

Today the Weir agency has 13 employees and $1.5 million in revenue, and is primarily a “generalist” agency, Donohoe says. If there is specialization, he says it’s toward social services: nonprofits and religious institutions (the agency insures convents in 41 states). The agency writes very few contractors or restaurants/bars. “We’ve made a very conscious effort to be contrarians in our market and our niche is where very few play,” he says. Donohoe attributes his agency’s success in part to its commitment to being ethical, honest and knowledgeable. He says the agency invests heavily in employee education and makes it a point to reinforce with employees their primary role as an advisor to clients. “I lay out facts and try to guide my customers in a way that’s best for them, not for me,” says Donohoe. “If you do that, you don’t have to worry about what’s in it for you. Our business is built on that. If you do a good job you won’t have to worry about finding customers.”

He says the desire to help people is intrinsic for his agency’s employees, and everything else is secondary to that guiding force. “That need to help is deep in my core—and it is deep in all agents’ cores, particularly smaller agents,” he says.

The Technology Challenge
But the way agents are being asked to help consumers is changing, and Donohoe sites the shift in consumer buying habits as one of the biggest challenges facing the industry. He notes that technology and the Internet are both a blessing and a curse, and that many independent agents still don’t understand how to use social media tools in a way that promotes their business and makes them visible. “We have to be more nimble and be willing to spend money on trying new stuff,” he says.

He says agents have to get a better handle on technology and new ways of marketing—and most importantly, learn how they can tie their personal relationship building skills to the technology tools to combine high-tech with high-touch. He hopes the association’s Consumer Agent Portal (CAP) initiative, a tool that will enable insurance shoppers to compare quotes from multiple independent carriers online and connect with local independent agents, will play a big part in helping agents reach consumers in new ways.

Donohoe says he transitioned day-to-day management of the agency to his partner Jay when he was elected to the Big “I” executive committee. But like most chairmen of the Big “I,” his work with the association started small and through networking. “I had a friend who was president of our local group and he got me involved in the association at that level,” he says. That simple introduction to association life quickly grew and Donohoe was president of the Minnesota association by the time he was 31. After taking a break from volunteer work, he then served as the Minnesota director on the national board for three years before stopping association service again. Until, that is, a new initiative called the Virtual University sparked his interest. “The Virtual University got my juices going and was where I got my passion—and ultimately led to me running for the executive committee,” he says.

It was his service on the national markets development committee, though, that demonstrated to him what the association and its breadth of offerings meant to members around the country. When overseeing the Eagle Agency program (the Big “I” incubator program for small agencies) for the first time, Donohoe remembers meeting an agent who was able to access her own homeowners insurance market for the first time through the program. “She had been selling fire insurance policies through her state’s insurance pool,” Donohoe says. “And she cried when we were able to give her a homeowners product to use. It showed me a whole part of the world I didn’t know existed—and the fact that I could help her felt good.”

The impact that the association can have in helping its members thrive—like the simple benefit of having access to a homeowners market—is what motivates Donohoe to make sure members know what the Big “I” can do for them and their business. “One of my goals for my term as chairman is to make sure that the products and services we have are responsive to 90% of our members—is what we’re building what they need?” he says. “If it is already built and they don’t know about it, how can we tell them? Are we serving our agents in ways that will give them a sustainable advantage in the marketplace?”

One of the biggest challenges facing the industry is also one of the biggest challenges facing the association: attracting the next generation of leaders. When he wanted to implement social media efforts at his agency, Donohoe says his son said, “Dad, hire someone and get out of the way.” “He was right—I didn’t know anything about it,” Donohoe says. “In the same way, most of the members of our board are Baby Boomers and haven’t sold anything using these new tools recently—we really don’t have a clue. We need to get young people into our agencies and our association. How are we going to run our association with no new blood?”

Donohoe is hoping to meet some of that new blood as he travels around the country for the association, a part of his role that he relishes. “Agents are great anywhere in the country, and I’m looking forward to traveling,” he says. “I’m very comfortable with the fact that my job is to cheerlead and to help…people understand what we do for them.” He wants to work on connecting everything the association offers, and he is particularly excited about showing members how Trusted Choice® and the Consumer Agent Portal are related in presenting the value proposition of independent agents to consumers.

Donohoe is anxious to spread the word about what the association can do because he says he has gotten so much more out of his involvement, both personally and professionally, than he has put into it. “I have gotten so much smarter and opened up to people and products that without the association I would have never had the chance to,” he says. “I’m very appreciative and awed by it—and love every second of it.”

Katie Butler (katie.butler@iiaba.net) is IA editor in chief.

Long Live the Little Guy
When Mike Donohoe looks into the future of the independent agency system, he wants to see small agents as a part of the mix. According to the 2010 Agency Universe Study, an overwhelming percentage of agencies pull in less than $1.3 million in annual revenue. “My agency is just a bit over that, so I’m very comfortable talking about the future of these agents because I am one [of them],” he says. With industry consolidation and a tough economy, what does the future hold for these types of agencies?

“One of my biggest worries is that all of the little guys are going to be gone,” Donohoe says. “What’s the effect of that on our national and state associations, and what’s the effect of that in our communities where we are an integral part of the economy? We are the type of people who serve our communities in many ways.”

—K.B.

Finding the Next Sales Superstar
It’s no secret that finding talent is a struggle for the insurance industry at large, and in particular independent agencies. Mike Donohoe says his agency has looked to the local college’s business school and hired recent grads without much success. “They haven’t made it,” he says. “Finding the right skill set is difficult—it’s a strange mix of skills [that are needed], but that’s what makes our business fascinating.”

And once an agency finds the elusive right recruits, what can they do to better their chances of success? Donohoe says young agents need to get involved in their community, noting he played a lot of basketball and softball, and attended his share of Chamber of Commerce events. “Get involved in things,” he says. “Let people see by the committees you serve on that they can rely on you. If they see you work in those types of settings, it’s natural you would be good at handling their insurance.”

—K.B.

Donohoe’s Association Activity at a Glance
Minnesota Independent Insurance Agents Association
Young Agent of the Year: 1979 and 1981
State President: 1983–1984
State National Director: 1993–1996
Agent of the Year: 1994
Chairman, Legislative Committee: 1996–2005

IIABA National
Chairman, Markets Development
Committee: 1994–1998
MSI/AAS Board Member: 1996–1997
Chairman, Virtual University Task Force: 1998–present
Presidential Award Recipient: 2004
Woodworth Memorial Award Recipient: 2005

—K.B.