McKeel Hagerty, CEO and Chairman of Hagerty Insurance, has steered his family’s niche wooden boat insurer into a publicly traded company by embracing a community-centric business model. His journey, as detailed in a recent ‘Masters in Business’ interview with Barry Ritholtz, reveals an unconventional background spanning philosophy and theology, culminating in a strategic ‘aha moment’ that redefined the company’s trajectory in the collector vehicle market.
An Unconventional Academic Path to Entrepreneurship
Hagerty’s academic career began with a BA in English and philosophy from Pepperdine, a foundation he describes as distinct from his early entrepreneurial inclinations. “I was an entrepreneur from the time I was young — I had a bunch of businesses when I was very young,” Hagerty noted. His pursuit of knowledge led him to a master’s in theology at St. Vladimir’s Orthodox Theological Seminary, an experience he found “incredible” for language studies and leadership insights. While the seminary environment naturally steered thoughts toward priesthood, Hagerty ultimately transitioned to doctoral work in philosophy in Boston before the family business called him away from academia.
From Wooden Boats to Automotive Dominance
The Hagerty Insurance Agency was founded by McKeel’s parents, Frank and Louise Hagerty, in Traverse City, Michigan. What began as a “retirement gig” focused on insuring collector wooden boats was, by McKeel’s account, a “very small family business, with a few employees.” His parents’ vision was to establish a national, niche business with long-term sustainability, matching an unmet need with their passion for vintage boats and cars.
The pivotal shift occurred when the family “stumbled into the car insurance business.” This expansion proved to be “much, much larger than the wooden boat business,” with Barry Ritholtz noting the collector car market is “orders of magnitude larger,” encompassing “millions of vehicles.”
A Personal Passion Fuels Business Strategy
McKeel Hagerty’s personal connection to collector vehicles runs deep. He recounted buying a 1967 Porsche 911S for $500 at age 13, a purchase he humorously calls “the only really good car deal I’ve ever done in my life.” He and his father restored the car, which Hagerty still owns and drives today. This experience provided a firsthand understanding of the enthusiast community, a perspective that would later become central to his business philosophy.
Hagerty highlighted the historical shift in collector car values, noting that in the 1980s, cars like his Porsche “were not expensive. They were not considered to be necessarily that valuable. They were just kind of cool older cars.” He contrasted this with the 1962 Ferrari GTO, which could be bought for “15 grand” in the 1970s but is now valued at “50 million, 60 million dollars.”
The ‘Club for Car Owners’ Epiphany
The strategic turning point for Hagerty Insurance occurred in the fall of 1995. While engaged in doctoral studies, reading Plato’s Republic in Greek at Boston College, McKeel Hagerty experienced a profound realization. He articulated this insight, stating, “if we would just stop acting like an insurance business and start acting more like a club for car owners, it would just transform the conversation that you’re having with people — because then you’re acting more like a car person, instead of an insurance person…”
This philosophy marked a fundamental shift from a transactional insurance provider to a community-focused entity. By prioritizing the enthusiast experience, Hagerty aimed to foster deeper engagement and loyalty among collector vehicle owners. This strategic pivot, born from a blend of academic rigor and personal passion, laid the groundwork for the company’s significant expansion and eventual transition to a publicly traded entity, embracing the broader community around collector cars, trucks, and boats.
McKeel Hagerty’s narrative underscores the power of combining deep personal interest with strategic business innovation. His journey from contemplating the priesthood and philosophical dissertations to leading a specialized insurance giant illustrates how a unique perspective, coupled with an understanding of community dynamics, can transform a niche market into a substantial public enterprise.
