CBUS targets $250 million premium outflow

Toronto-based Cross Border Underwriting Services Inc (CBUS), a subsidiary of the listed KRG Insurance Group, notched up half a million in premium dollars in its first year of operation.

A specialist wholesale brokerage operator, CBUS was created a year ago to provide Canadian brokers with a means of servicing their clients with offshore exposures. In particular, notes Paul Martin, the company’s president, CBUS’ main focus is the U.S. market in providing carrier facilities catering to the more complex coverages such as workers’ compensation.

Based on the company’s market research, approximately a quarter of a billion dollars of Canadian premiums leave the country every year due to a lack of local servicing and underwriting capacity. CBUS plans to bring back between $1.5 million to $2 million of this outflow by its third year of operation, says Martin.

CBUS underwriting manager Wanda Thrush points out that, on workers’ compensation alone, close to $50 million in Canadian premiums are taken up by U.S. third-party brokers and carriers. “Our objective is to bring this premium back to Canada by offering local expertise and bulk buying power to brokers,” she adds.

While brokers have been frustrated by a lack of local facilities in servicing offshore business needs, Thrush notes that many are unaware of the potential rewards of servicing this growing market segment. Canadian franchises have blossomed over recent years and have gained popularity not only in the U.S. but around the globe. “I really believe that brokers are missing an earnings opportunity by not maximizing on this expansion.”

Although CBUS has concentrated its efforts on servicing Ontario’s brokers, the company has established links with both east and west coast operators, observes Martin. “We have gained a position on the east-coast, and through word-of-mouth, established a modest presence on the west-coast.”

Part of the company’s growth plan is to go national and establish a direct office in the U.S. Initial talks have been held to achieving the latter objective, he adds, which could result in a CBUS U.S. office opening by the spring of next year. CBUS currently deals with underwriters operating from within Canada but with offshore writing authority. “The real problem brokers have faced in contending for this offshore-flowing premium is the lack of volume on an individual-to-individual basis in placing the business with a local carrier, and for that matter, finding one which can write business in the U.S. or the U.K., or any other country. This often results in the Canadian broker referring the client, and therefore a good slice of the business, to U.S. brokers,” he adds.

CBUS has established relations with carriers licensed to underwrite business in the U.S., Central and South America, as well as several European countries. It has focused on niche areas of business such as workers’ compensation which, Martin explains, requires a greater level of expertise in structuring an insurance program. “We’re picking areas where we can add value at the higher end level of the market,” he says.