Remembering SAFECOBy Russ Banham

  • By Russ Banham
  • Posted 10/08/2008
  • Essay 8701
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This history and reflection on SAFECO was written by the well-published author Russ Banham and is presented by SAFECO.

In the Beginning

Former Safeco independent agent Frank Hanson is a major Eastern Washington landowner these days, and he credits the company with giving him the financial wherewithal to plant his first big stake -- more than 1,800 prime acres along the shores of Lake Roosevelt, near the Grand Coulee Dam. To purchase the land, Hanson sold shares of SAFECO stock that he had accumulated since the insurer’s infancy. How he acquired the stock is a novel story, one that begins on September 18, 1953.         

The day was uncommonly sunny in Seattle, he recalls, with blue skies and nary a cloud above. Inside the now-demolished Metropolitan Theater, adjoining the Olympic Hotel, Hanson and more than 1,000 other agents and employees of the General Insurance Company of America sweltered in the heat. General Insurance had summoned the group to announce the creation of a new automobile insurance company -- Selective Auto and Fire Insurance Company of America. SAFECO, as it would be called, would compete against direct writers of insurance that had slashed auto premiums to the bone and were jeopardizing the survival of General Insurance. The new subsidiary was formed to save the General, offering a sharply reduced rate to increase the company’s market share.         

But, that strategy required dramatic changes the way the insurer did business. For instance, SAFECO would bill customers directly, handle policy renewals, and eliminate other administrative tasks customarily handled by agents. In return for this reduced work, the agents were informed that their commissions would decrease from 25 percent to 15 percent of premiums. “We all looked at each other in shock, realizing our income was about to fall 40 percent,” says Hanson, a General agent since 1939. “You could hear a pin drop.”         

The sobering news was delivered by H. K. Dent (1880-1958), the founder and chairman of General Insurance. In a speech entitled, “Can We Survive?” Dent carefully explained that charging lower, more competitive premiums would help agents write more business, compensating for the reduced commissions. “Mr. Dent said it was up to us and our sales ability to produce more business for the company to survive,” Hanson recalls. “We believed him, but it was still a blow.”         

The veteran agent made a decision at that moment that would have profound financial impact. Rather than accept his future commissions in cash, he informed General Insurance’s treasurer that he wanted the funds invested in Safeco stock. “As the company got bigger and bigger, so did my stockholdings,” Hanson says. “It just kept splitting and splitting.”

When his wife, Ellarene, insisted a decade hence that he cash in $37,000 of SAFECO stock to buy the 1,800 acres on Lake Roosevelt, Hanson initially resisted. Among the many hats he wore at the time was that of a realtor, and he was desperately trying to sell the land to others. Ellarene, who had graduated college and knew a good deal when she saw one, wouldn’t give up. Finally, Hanson acquiesced, sold his shares and bought the property. He later created a successful residential development on the site and named it Hanson Harbor. “Over the years we have added more acreage to our initial purchase, now encompassing a total of 3,000 acres and extending along the south shore of Lake Roosevelt a distance of three and one-half miles,” he says.

Dentist: Take My Agency, Please        

 Hanson was born in the shadow of Boeing Airfield in South Park, Seattle, in 1918. His parents divorced when he was young and, after what he refers to as a “nomadic existence” with mother, he was dispatched to live with his grandparents in the tiny farming community of Wilbur, Washington (pop. 800 then and now). He was 13 years old. After graduating high school, he took various odd jobs, working as a lifeguard at a swimming pool, mowing lawns for $30 a month, hauling wheat at a sack warehouse, and toiling with a surveying crew developing the Grand Coulee Dam. Tired of this sporadic employment, Hanson gained a fulltime position in Wilbur managing a plant for Shell Oil.         

His career took a new turn in 1939, when a former schoolteacher from Wilbur left the town for Moscow, Idaho. The teacher sold his home to a local dentist, and at no extra charge included the small insurance agency he owned, called Weisel Insurance. The dentist had no intention of running another business, however. “He called me and asked if I wanted the agency,” says Hanson. “I told him `no.’ He kept at it, insisting that if he gave it to me for nothing I had nothing to lose. I was making about 60  bucks a month at the time. He finally wore me down.”

The Hanson Insurance Agency was born. It was a christening by fire: Hanson was 20 years old and knew nothing about the insurance business. Fortunately, he had held onto his job managing the plant and soon bought another one owned by Signal Oil. The business came with a fuel truck -- Hanson’s sole vehicle -- and he drove it from one small farming town to another, selling insurance in places like Coulee City, Keller, Mansfield and Creston. Along the way he acquired a few gasoline stations and started a family. “The local druggist accused me of having my entire office in my hip pocket,” Hanson laughs. “It was pretty skinny pickings, but I did okay.”

In 1947, he sold the gas stations and the Signal Oil plant and went into insurance full time. His sole market was fire and casualty from General Insurance, which oversaw Eastern Washington operations from Spokane. A four-man crew served this outpost, including H. K. Dent’s nephew Kelly Waller, who eventually headed one of SAFECO's  life insurance companies. Others in the Spokane office included Ivan Larkin, George Mosley, and Jack Adams, who later became the mayor of Coeur d’Alene, Idaho. 

Hanson got to know all four men well, although they did not see eye to eye on a particular issue. “General had a strict dress code,” says Hanson. “They would visit me wearing these sharp looking suit jackets, with white shirts, ties, and hats. They all looked the same; you could see a General man coming a mile away. Anyway, they strongly suggested that I should dress better. Of course, I just laughed. I couldn’t imagine myself going to a plowed field in a suit to sell insurance to a farmer in bib overalls and boots.”         

H. K. Dent, who prided himself on his dapper appearance, had mandated the stringent dress code. General’s founder explained at a sales meeting in 1955 that “white shirts and four-in-hand ties” were appropriate for employees and agents because they didn’t distract “the prospect’s attention away from sales talk.” Dent also forbade smoking by employees for much the same reason, having quit the habit himself in 1910.

Passing the Torch

Hanson came into contact with Dent several times over the years, and found the great businessman a trustworthy, charismatic presence. “He was a wonderful speaker,” Hanson remembers. “He used to take me into his office in the old building and could charm you under your chair. But, he was a fair man, too, and made policies you could live with. I believe very much that he was more for the agent than for the stockholder, and bear in mind that I was both.”         

Over the years, Hanson squirreled away his pennies, saving enough to build a 25- by 90-foot building on Wilbur’s Main Street in 1949. He opened his office there the following year and hired a local woman to answer phones a few hours a day. After three months she joined fulltime and stayed put for more than 20 years, later earning her CPA designation. “A great deal of my success was due to the quality of the people I was able to employ and the friendly, supportive nature of the farmers, business owners and residents in this part of the world,” he says.

In the 17 years that he declined his SAFECO commissions, the company -- and Hanson’s stockholdings -- enlarged substantially. In the meantime, he added other insurance markets and also began selling additional lines of insurance, such as homeowners policies. In 1970, his son Gilbert joined him at the agency, freeing him up to focus on his burgeoning real-estate interests. In 1982, Hanson retired and sold the business to Gilbert. “I owe SAFECO a debt of gratitude for its help to me as an independent agent over many years,” he says. 

The Hanson Insurance Agency grew through the eighties and nineties, and eventually merged and consolidated with three other area agencies. “It seems the days of the one-man agency are long gone,” he says. At present, it is known as AAG Insurance Agency, Inc., with numerous offices dotting Eastern Washington.

Safeco remains the agency’s major market, nearly 70 years since Hanson capitulated to the entreaties of a local dentist and entered the insurance business. Despite recently celebrating his 90th birthday, Hanson still goes to work most days managing his real-estate interests. He also has four grandchildren, from Gilbert and his daughter Sara, and two great-grandchildren to attend to.

With a lifetime spent navigating the risks of several businesses, Hanson’s other passion comes as no surprise: “I’m a poker player and a pretty good one at that,” he says. “My favorite is `Texas Hold ‘Em.’”

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