Domestic insurers key to survival of independent broker channel

Brokers must maintain a balanced portfolio and resist relying too heavily on European-based insurers, warned Colin Simpson, senior vice president and chief strategy officer of Kingsway Financial Services.
Simpson spoke at the Insurance Institute of Ontario’s ‘At the Forefront’ breakfast in Toronto on the need for brokers to support domestic insurers to ensure the survival of a robust broker distribution channel.
The European insurance market leaders tend to leverage multi-channel platforms, but a European insurer aiming to grow Canadian business will only get this market share from one place — brokers, Simpson said.
“In order to control any market, you need to have 20% share of the market,” he said. “If you have 20% of market share, you can probably stabilize that market much more easily than if you have less.”
The biggest company in Canada has 11 or 12% market share, leading European-based insurers to see huge growth potential in the market, he continued.
But such consolidation comes with a price, and that is the European-based insurers’ multi-channel distribution approach.
“My message to brokers is that you must maintain a balanced approach to your portfolio,” he said. “Nobody is saying that you can do away with the Europeans, because they write some business that domestic insurers can’t write or won’t write.”
But when faced with a choice between placing a risk with a domestic company or a European company, “think twice as to what that European company is ultimately going to do to your distribution channel.”