Fulfilling the Tokioka Legacy

This company stays true to its local roots and to its Japanese founder's beliefs

August, 2003

Linda Gilchrist knows all about high pressure. The chief operating officer and president of Island Insurance faces it every day. There is the pressure of ensuring that her 150-employee local insurance company competes against international giants that trawl the Hawaii underwriting markets. Then there’s the pressure of supporting an extensive network of independent insurance agents, who resell Island’s retail policies statewide. The highest pressure, however, comes from living up to the expectations of Masayuki Tokioka, late founder of the company.

Most Hawaii business leaders will forever associate Island Insurance with Tokioka. Born in Okayama Prefecture, Japan, in 1897, he came to Hawaii to join his family at the age of 12. Tokioka attended McKinley High School, the University of Hawaii and later became the first Japanese-American to garner a sheepskin from the Harvard Business School.

In 1939, Tokioka founded Island Insurance to serve small businesses and working people. He felt those groups needed better service and value. He was a regular on the lists of most influential Asian-American businessmen in the United States. Tokioka passed away in 1998. His grandson, Franklin, serves as the chief investment officer of Island Insurance and its parent company, Island Holdings.

That gives Island Insurance some of the deepest local roots among companies on the Top 250 list. It also means that the Tokioka name and reputation still will travel with the company on its current trajectory.

This is where Gilchrist fits in. She transferred to Island Insurance from AIG Hawaii in March 2000, replacing the top operating position held by local business legend Wayne Arakaki. During her tenure, Gilchrist maintained the same razor-sharp market focus that Masayuki Tokioka created when he first founded the company. “Our target markets are individuals who need automobile and homeowner’s insurance and small- to mid-size businesses. A lot of what we do is based on close relationships with local people,” she says. It has relationships with 30 agencies and 1,000 agents.

That kind of focus is necessary to keep the insurance player in the black. Due to its smaller size, its cost of operations runs higher than those of big U.S. Mainland companies, which also compete for insurance dollars in Hawaii. These companies include Allstate, State Farm, GEICO and AIG. Due to its small size, Island Insurance also spends more per employee for everything from software fees to health insurance (something the company does not offer). But Island makes up for its lack of size with smarts and the ability to make better decisions in the science and art form of valuing risk, Hawaiian style.

“While we might have expenses slightly higher than the national carriers, we make up for it with the quality of our underwriting and the loss ratios we sustain,” Gilchrist says. Right now, Gilchrist says Island is more than happy to stay at home and grow its market share in the Aloha State. That’s probably just the way Masa Tokioka would have liked it.

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