At 75, family-run Occidental Underwriters shows how a small business can transform an industry
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(above) LOCAL LANDMARK: The Occidental Underwriters building opened on Feb. 1, 1951. The “control tower” penthouse residence was added in 1967.
The idea – a first for an American insurance company – changed the industry, near and far, even earning a place in the Insurance Hall of Fame located at the University of Alabama. “Our history is recorded there,” he says. Far more important than the historical mention, Kagawa is proud of what the change has meant to customers.
“Think of the millions of dollars that have been saved in Hawaii and all over the world.”
BREAKING THE MOLD AGAIN
Once he opened, L.T. took to the airwaves, in Japanese, to explain to the public how customers had been overcharged for life insurance. But rather than rushing to buy insurance from Kagawa, many wanted to work for him. He hired some of them on a commission basis, and the loyal group helped his business grow.
Then World War II broke out and Kagawa was interned in Jerome, Ark., during which time others managed his business via power of attorney. He returned to Hawaii not embittered, but anxious to expand his business by trying out a new idea, his family says.
TOUGH OPENING: L.T. Kagawa (seated, left) and his staff got their start during the Great Depression. This photo was taken sometime in the 1930s at the original headquarters at the Dillingham Transportation Building.
Home ownership was a struggle in Hawaii because banks, convinced that homes in Hawaii were too termite-infested to last, only offered mortgages with seven-year terms. Kagawa did something about that, too. In 1948, Kagawa’s company became the first in Hawaii to offer 20-year mortgages. He did this by first convincing legislators in Washington, D.C., to allow FHA loans in Hawaii and then getting Mainland insurance companies to invest in the mortgages.
Sig Kagawa later followed his father’s example of innovative thinking by having the company’s agents sell not only insurance, but also investment products such as securities. Initially, the move ruffled feathers. “People said, ‘How dare you do that! Insurance men don’t sell investments!’” Sig recalls. But the reasoning was sound. “You can’t help [customers] if you don’t look at all aspects of financial security besides insurance,” he explains.
Pretty soon, Sig says, competitors no longer raised a huff, but followed suit by expanding their product offerings to include investments.
A HOME AT THE TOP
When L.T. Kagawa was getting his bus-iness off the ground in 1933, Walter Dillingham was having trouble finding tenants for Dillingham Transportation Building in downtown Honolulu. Kagawa proposed that Dillingham rent him space, for free. “He told him that in a few months, his business was going to take off, and [Dillingham] would have a tenant,” son
Sig Kagawa explains.
The business really did take off. In fact, by 1951, the company had built its own building. True to form, the idea of an insurance company having a building of its own was a departure from convention. “Insur-ance men always worked out of the back room in a warehouse,” Sig says. “But he thought insurance men deserved their
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