Business is booming and for the first time in two years an Underwriting Agency has made huge advances with many new auto products and services with great ideas, solutions, and technology. The growth in the last 24 months has defied the pandemic restrictions and Colin Brown, CEO & Founder of Stratford Underwriting Agency Inc. shares the same story.
There are very few people with as deep an understanding of vehicle insurance as Colin Brown. From emigrating to investing 22 years of his life in a company, Mr. Brown claims to provide services against monopolies in the industry.
Please tell us about your educational/professional background. Who inspired you to become a business leader? Would you like to mention some of the highlights from your journey?
I emigrated from Ulster in October 1973. I had a degree in Geology and Geography from Queens University Belfast. I started my career as a management trainee at the Insurance Corporation of British Columbia (ICBC) in January 1974 and the Corporation opened for business in March 1974. I worked at ICBC for 22 years and resigned as Chief Underwriter in 1995. During that time, I became a Chartered Insurance Professional, a Chartered Arbitrator, and also received an MA in Liberal Studies from Simon Fraser University.
In 1995, following my resignation, I founded Canadian Direct Insurance (CDI). CDI was the first direct writer in Western Canada and sold optional auto insurance coverage by phone and internet in competition with ICBC which is a quasi-monopoly. At the outset, CDI was a wholly-owned subsidiary of HSBC. It turned profitable in its fifth year and 2005 was sold to Canadian Western Bank (CWB) for $25 million, or 1.25 of book value. CWB were great owners and after a change in leadership in 2015, sold CDI to Intact (Canada’s largest insurer) for $200 million, or 2.5 times book value. CDI had additionally previously issued dividends of $35 million to the bank already to protect CDI’s capital ratio. It was a massive success. I was appointed Executive Officer of Intact, but I retired in 2016 at the age of 66.
Please brief us in detail about the current scenario of the business. How have the customer preferences changed over the years?
The auto insurance business in BC is dominated by ICBC. They have a monopoly on “the basic” which is the minimum cover that you have to buy to put a vehicle on the road. They also sell almost 90% of “optional” which are the add-ons for collision cover, comprehensive, etc. That optional market is worth $2.5 billion in BC. CDI had been the largest seller of optional.
Following my retirement, I did a little consulting but was approached several times to start another company. I finally did so in 2018 and founded Stratford Underwriting Agency Inc. We are a Managing General Agency (MGA), essentially a wholesaler of niche products that are otherwise hard to find. Stratford started in 2020 with its own BC auto product (CDI 2.0), underwritten by a major reinsurer that I had worked with for 20 years. Customer preferences have not changed in this regard, they still want a viable option to a government monopoly. A better product, more bells and whistles, and a lower price. We sell through a network of 200 independent brokers.
What are the prominent products/services offered by the company? How are they different from your competitors’ offerings?
Stratford’s two current products are differentiated in price. Both offer products very similar to our competitors but priced better. Our products have better coverages in key areas that make them more attractive and in addition offer better features. This is achieved through smarter underwriting. Our primary product is designed to save 80% of BC motorists on their purchases.
Currently, Stratford offers a full-service BC auto optional product and a replacement cost policy for the loss of value on new cars that may become a total loss. In 2021, we wrote a total of $27 million in premium, had revenue of $7 million, and lost $170,00 in our second year of business. We are very happy with that. We will write about $38 million in 2022 and make $1million+ in profit. We are developing two other non-auto products at this time. They will broaden our scope and spread our risk base.
What are the unique challenges your company is currently facing? How have they affected your company?
At the time we entered the marketplace, ICBC have declared BC to be a “no-fault” jurisdiction. Essentially cutting out the need for third-party liability cover and reducing the average premium available from $800 a policy to $500 a policy. This was effective May 1st, 2021. Stratford was forced to find a product to replace the lost premium. This was done in short order and a replacement cost policy was added in February 2021 and we sold $10 million worth of policies for the premium product in 2021. Opportunity and agility melded together on that one.
What measures do you incorporate to ensure motivation and productivity within the workspace? How do you respond to criticism and disagreements?
As a company, our system was designed to be flexible. It is in the cloud and supports working from home. We encourage attendance at the office as needed. Staff who can influence key indicators are incentivized appropriately. All staff is bonused on the corporate performance. We have an open office plan which encourages open discussion and deals with any issues as they arise. We have a complaints officer who responds to any customer complaints.
What measures do you undertake to ensure optimum customer satisfaction? How much impact does the customer feedback have on the company’s strategies?
We do have a complaints officer who is charged with dealing immediately with any issues that arise. As we sell through independent brokers, there are few complaints directly to us. Most would be claims disputes and there are formal procedures in place for dispute handling. If there is a consistent valid issue, we are quite at ease in varying the rules and changing them, if appropriate.
Are you planning to launch any new products/services or advancements to your existing offerings? If so, we would like to know about it.
Stratford is developing two new products, both non-auto in nature. The first is very exciting and, while confidential in nature is cover for a very commonly used household possession it is used away from the home and has been largely ignored by mainstream insurers. Stratford will offer a full range of covers. The second is a more standard commercial property series of covers, which are offered in a much more sympathetic format than mainstream insurers offer.
In both cases, Stratford is benefiting from partnering with experts in their fields to make sure we offer only the best and most meaningful covers.
As a decorated leader, what would be your piece of advice for entrepreneurs seeking careers in the business?
I often reflect on this at the age of 72… “what have I learnt?” Probably not much in the universal scheme of things, but a few business truths due stand out.
First, I believe that in the financial services industry, especially in Canada, you HAVE to learn the basics. When you are operating in a regulated industry (and Canada is very heavily regulated), then you must know all the rules. I learned in a Crown Corporation environment and ended up writing virtually all the policy wordings and attendant rules. It is so much easier to bend the rules and make changes when you understand the framework.
Second, as long as you retain the fundamentals, you can be free to hire younger, smarter staff who can think outside the box, say “why not?” and shake the trees. I think that is my key to learning. We passed it on to our son, who has taken it into the Canadian banking sphere and been a huge success. He worked in the branches, learned the rules, and now can break out and do what no one else is doing.
When you are operating in a regulated industry (and Canada is very heavily regulated), then you must know all the rules.
