By By JOHN EBY / Dowagiac Daily News
As someone with 25 years in insurance, Paul Shingledecker, owner of Preferred Insurance Services in Dowagiac, remembers how his industry changed forever five years ago in the wake of the Sept. 11 terrorist attacks.
While the World Trade Center in New York City and the Pentagon in Washington bore the brunt of the devastation, Shingledecker feels a lasting impact even in southwestern Michigan.
"The products have not changed dramatically over the years," he said.
"What's changed is the market. When 9/11 occurred, the insurance market changed dramatically. While most companies didn't have a direct loss, all companies buy re-insurance, which says if there is a catastrophic loss, they know what their loss is going to be. If they buy a $5 million policy, anything over $5 million, the re-insurance is going to kick in.
"If a tornado came through Michigan, for example, they know their loss is going to be $5 million and they can set their rates based on that.
"What happened with 9/11 is two re-insurance companies went insolvent. That pushed everybody else into a smaller group of re-insurance companies. Re-insurance rates went out of sight," Shingledecker said Thursday. "What you saw was companies rewriting homeowner's business. Homeowners' rates went really, really high, and the market changed. How companies look at business has really changed more than anything else" as a result of 9/11.
"The other thing that happened Sept. 11," he continued, "insurance companies for the longest time brought money into their companies at a loss, particularly on property. They knew they could do that, invest the money and make their money on the investment side and they didn't pay close attention to underwriting. Well, Sept. 11, besides the re-insurance problem, the stock market took a big dive. Now these companies all of a sudden lost that investment income. Sept. 11 had a dramatic impact on the insurance industry – and not just in New York. It's something people don't see on a day-to-day basis, but it affects them everyday because it changed underwriting and rates."
The Internet also revolutionized his industry, with so many policies issued electronically online.
From his vantage point, "The Web has some real drawbacks. One, if you have a problem with the company – that middle man they're trying to get rid of is us. We deal with the company on your behalf. Two, Geico and those companies do a great job of promoting auto insurance products, but who's going to write homeowners? Online carriers don't write anything but car insurance."
"I don't have a gecko," he chuckled. "I guess we could get a lizard in here, but service is what we have to bring to the table in competition. If you've got a problem, you've got us to call. That's why our relationships with those companies is important. We are the advocate. That's what we do. There needs to be somebody to stand in the middle.
"The 15-percent price break is misleading. Fifteen percent off of what? The highest premium someone charges in the state? If they compare their best to my best, they might not save anything. Oftentimes, we're better than what they are, plus you've got someone to come in and talk to face to face. I've got a feeling the gecko isn't going to help in deciding what kind of coverage you need on your ATV."
"They would like you to think that we're a dying breed, that they're getting rid of the middle man," Shingledecker said. "But there still needs to be someone to evaluate what your needs are and to give advice so you can get the right coverage and to solve claims problems. That's us."
"Our message is service. We're a service industry," he said. "Two, because you see it on TV doesn't mean it's the most competitive price. Value might be the better term for what you get from us because you're going to get competitive prices, plus somebody who works for you."
"You're going to get local people who know Dowagiac" with Preferred, he said. "Karen and Sunny live in this community. They raised their kids in this community and are your neighbors. As we expand staffwise, we're going to hire somebody else from Dowagiac. We're going to be a Dowagiac employer. What Preferred brought to what Karen had is more established, larger companies, which are hard to get. They give them the tools to work with to help people. We're going to grow here."
He acquired the 9-year-old Langley Insurance Services at 211 Pennsylvania Ave. in the former Fox barber shop in January.
Karen Langley stayed on as agent. The other agent is Sunny Price. Shingledecker, of Three Rivers, concentrates on commercial accounts.
He plans to open a third agency in St. Joseph County in Sturgis Dec. 1.
"Three Rivers and Dowagiac are really similar towns," he said. "For me, it's a good fit. I do most of my business in two counties, Cass and St. Joe, and there are three cities in those – Dowagiac, Three Rivers and Sturgis.
"People will come from Cassopolis to Dowagiac or from Marcellus or Centreville to Three Rivers, but very seldom do they go the other direction. There's a mentality that there's more available in the bigger towns. Very few people are going to go from Dowagiac to Decatur to buy insurance. It's usually the other direction."
Having just met with a Vandalia customer, he also noted the Cass County tug Dowagiac exerts for someone who could just as easily travel east to Three Rivers.
"For Cass County, Dowagiac is where it happens," Shingledecker said.
As an independent agency, Preferred's niche is "writing everything," including policies for auto, home, life, church and business.
"We predominantly write home and auto, but we also do a fair amount of commercial business. We can handle everything. Grange Insurance (a regional company based in Columbus, Ohio, and serving also Michigan, Indiana, Illinois, Wisconsin, Georgia, Tennessee, West Virginia and Kentucky) is a company nobody else in Cass County writes. We also have Safeco, Nationwide, Bristol West and Progressive."