Sixty years young

Sixty years young | Insurance Business Canada

Sixty years young

“We’ve got a very compelling story.” That’s how John Barclay describes South Western Insurance Group (SWG), which is celebrating its 60th anniversary in 2021, making it one of the longest-standing MGAs in the Canadian marketplace.

Since 1961, SWG has provided under-writing expertise to independent insurance brokers across Canada. Over six decades, the company has evolved from a one-person operation with a single contract in South-western Ontario to a thriving MGA that offers a broad range of insurance solutions for specialty, niche, program and hard-to-place business.

There is one consistent theme underpinning SWG’s “incredible journey,” according to Barclay – its laser focus on helping brokers. That cornerstone has enabled SWG to “persist in the face of great challenge,” says Barclay, and sustain its independent brand for 60 years when much of the market has consolidated around it.

A time of transformation

Barclay has been president and CEO of SWG since May 2013. He was well equipped for the role – before joining SWG, he was president of Simmlands Insurance Services for almost four years, where he built the golf-focused MGA into more of a diversified specialty insurance business. Prior to Simm-lands, he spent 15 years at Marsh Canada, where he held a number of roles, including client executive, business unit leader and managing director.

Since joining SWG, Barclay has used his extensive industry knowledge and leadership capabilities to re-energize and refocus the company. Fifty years ago, SWG’s core value proposition was its ability to deliver capacity and access to the insurance marketplace, but today, the business looks very different. Barclay has spearheaded SWG’s transition from more of a wholesale broker to an MGA with in-house authority to underwrite specialty solutions – a carefully weighed strategy that took several years to complete.

“Over the years, the domestic insurers in Canada have grown stronger and stronger,” Barclay explains. “It is a very competitive marketplace with a surplus of insurance capital, and therefore the domestic insurers are writing a broader range of risk. We realized that over time, the wholesale business model – where we claimed capacity as one of our core value propositions – was not a long-term sustainable strategy. There is a role for wholesale brokers, absolutely. In fact, in this hard market, wholesale is huge right now. But our ultimate goal is to support independent insurance brokers across Canada by providing them with good products at a fair price and expert underwriters who can help them win or retain accounts.”

In recent years, SWG has also undergone a significant digital transformation in support of its goal of “helping brokers wherever and whenever they want to be helped.” Barclay says the MGA has undertaken an “extensive rewiring and complete re-platforming” onto cloud-based digital and automated solutions – again, with the ultimate goal of providing long-term value to the broker channel.

SWG has also changed ownership during Barclay’s tenure and, in doing so, has expanded its core capabilities. In May 2018, the MGA and its subsidiary, Optisure Under-writing Services (which specializes in inland marine coverage), were sold by Canadian Broker Network to Three Holdings, a privately held insurance services group that also owns MedThree Insurance Group.

“Every decision we make revolves around bringing more value to our broker partners,” Barclay says. “The Three Holdings deal has enabled us to deliver more specialty capabilities – MedThree offers specialized allied health, senior care and life sciences businesses – which are supported by SWG’s core capabilities in property and liability insurance. That business model of core product wrapped up with specialty capability feels sustainable to us.”

Post-pandemic and beyond

SWG’s product diversity has enabled the MGA to weather the storm of the COVID-19 pandemic without too much pain. Some of its business segments, such as hospitality and small business accounts, have struggled, while other segments, such as those overweighted to property exposures, allied health and professional liability, have continued to thrive.

“In the aggregate, the COVID-19 pandemic has been challenging,” Barclay says, “but our business has done well, and that’s due to the strength of our portfolio. We’re coast to coast, so we’re not too exposed or overweighted to any one given economic fluctuation. We’ve got product diversity; we’ve got class of business diversity, and that diversification in our portfolio has provided a very solid foundation for the business to do well, notwithstanding some specific challenges caused by the pandemic.” 

Over the next three to five years, Barclay says he’d like to see SWG double its premium under management.

“Our strategy is to onboard more specialty talent and to expand our market segment and product capabilities for independent brokers across Canada,” he says. “That will all be underpinned by a strengthened technology platform and supported by strict actuarial discipline – always with the mindset of SWG operating as close as we can to being a virtual insurance company.”

As a secondary market, the MGA space serves a distinct purpose, according to Barclay, which revolves around cost-effective product manufacturing, a wide distribution footprint and specialty talent.

“Generally, the secondary market can also react faster to market changes – both positive and negative – than the primary domestic insurers,” he says, “so it provides that balance for an insurance company or an alternative capital provider that’s looking to put its money to work.”

In order to survive and thrive for another 60 years, Barclay stresses that SWG must continue to develop new innovations and expand its specialty capabilities.

“MGAs are always pushing into new industries, new business segments and new capabilities because, over time, capacity demands change or the domestic insurers find ways to write risks internally and the premium rotates back to the standard market,” he says. “If you look at it from a broker’s viewpoint, the MGA industry acts as a pressure release valve for the standard market.”