South Western Insurance Group Limited’s decision to migrate from wholesale broker to Managing General Agent was far from a casual one. A carefully weighed strategy, the move began in earnest some four or five years ago, prompted by what president and CEO John Barclay refers to as a “very competitive domestic environment”.
In a marketplace boasting a surplus of insurance capital, standard insurers have been on the move horizontally – writing a broader range of risk across the spectrum – as well as vertically for some time.
“We have had insurers moving up the chain in terms of writing larger risk,” Barclay explains, “and some larger insurers leveraging their talent and capacity to write smaller sized risk profiles. We began to realize that, over time, this could make things difficult for a secondary market player claiming capacity as one of its core value propositions.”
While Barclay is quick to point out that there will always be a need to deliver capacity, that need is likely to become less relevant as time goes on – and less valuable where South Western Insurance Group Limited’s broker channel is concerned.
“There were two issues that became apparent as we evaluated this change,” he says. “We had to figure out what would provide our company with more sustainable value over the long-term, but more importantly, we needed to understand what would deliver better value to our brokers.”
Has his company hit on the right recipe for success? Barclay thinks so.
“Fifty years ago, our ability to deliver capital and access to the insurance marketplace was extremely valuable – it was the core reason we existed. But those were different times. In shifting from about 80% wholesale/20% underwriting years ago – to 70-80% underwritten today – and a large proportion of our net growth year-over-year now comes from the new, “refreshed” side of our business.”
And that is good news for brokers, since the move toward less wholesale and more underwriting has led to a more focused approach to what is being underwritten.
“As we met with and surveyed our clients,” says Barclay, “there were a couple of things that stood out. Brokers were still looking for capacity in a pinch, but they needed it quicker. Our answer to that was to bring the authority in-house to allow for faster turnaround.” Perhaps more significant, however, was the recognition that brokers were looking for more reasons to come to South Western Insurance Group Limited.
As Barclay describes it, “Our broker channel was looking for access to real solutions – specialty solutions that would help them win or retain more accounts. You provide general liability? Great. But you also offer pollution liability? Hospitality coverage, security services, high value homeowners, inland marine? Now those are tough risks. Those are products with stories around them!”
The company’s comprehensive solutions mean brokers can partner with the firm’s branded products and specialized staff knowledge to differentiate themselves in the eyes of prospects and clients.
“But,” says Barclay, “for those who just need some liability capacity, some property capacity, we still do that and we do it very well. Basically, our company has become a lot more well-rounded in terms of what we offer our brokers.”