Home Breadcrumb caret News Breadcrumb caret Industry Thinking Big From Small Most people in the industry think he has lost his marbles, launching a new property and casualty insurance company in Canada from the ground up in what is widely seen as an overcrowded and cutthroat market. To say that Brian Johnston, who was the president of Liberty Canada Holdings until resigning in early 1997, is […] November 30, 1999 | Last updated on October 1, 2024 5 min read Most people in the industry think he has lost his marbles, launching a new property and casualty insurance company in Canada from the ground up in what is widely seen as an overcrowded and cutthroat market. To say that Brian Johnston, who was the president of Liberty Canada Holdings until resigning in early 1997, is “bucking the trend” would be a gross understatement. However, having the competition thinking “he’s crazy” is something Johnston is happy to live with whilst quietly but methodically setting up the national infrastructure for his new low-cost based company, Markham General Insurance Company. My career in the property and casualty insurance industry has at times, been difficult because I’m not the complacent kind,” admits Brian Johnston, who recently announced the start-up of a new property and casualty insurer, Markham General Insurance Company. With a long career dating back to the 1960s initially involved with claims management, Johnston has worked his way around the industry, from insurer to broker, eventually culminating in the 1990s with the presidencies of Liberty Canada Holdings and CIGNA Insurance Company of Canada. Johnston resigned from Liberty Canada in 1997 with the intention of retiring from the business. However, the blood of the industry clearly ran thicker through his veins than even he thought, and the concept of Markham Insurance began to take shape shortly thereafter. In two years, he proudly notes, Markham had been taken from concept through to finalization, with the company opening doors to personal lines business in Ontario this past October. Regulatory filings have already been processed across the other provinces, with plans to add commercial lines underwriting by February 2000. “When I made the decision to resign from Liberty, I really didn’t want to be part of another large corporation. I expected to retire, but the itch of what I had seen for some time in the possibility of launching a low-cost Canadian-owned insurance operation had to be satisfied.” And, modesty aside, Johnston is quick to point out that Markham probably would not have made it past the drawing board without the support of several people, the most important being John McGlynn, whom he had established a longstanding working relationship over the years. McGlynn has been appointed president and chief operating officer of Markham, and holds the same responsibilities in the holding company, Millennium Financial Management Ltd. If the start-up of a new insurer was not enough to have the industry declare Johnston as “otherwise”, the two-pronged strategy being applied by the company has raised more than an eyebrow or two. Johnston says Markham will focus primarily on lower density population areas with distribution through a closed broker network. The company currently has 20 brokers appointed, exclusively servicing area jurisdictions. Johnston expects to have up to 60 brokers representing Markham by the end of next year. And, while the insurer may consider approaching high-density centers such as Toronto in the future, the company will employ a different approach, Johnston says. “The one factor that will be a constant in any initiative will be consultation with our independant broker partners,” he adds. Which raises the second core focus of the company, to compete on a significantly lower expense ratio to its counterparts. Johnston points out, when you cut through all the layers of added management complexity, the basis of running a p&c company on a profitable basis really amounts to ensuring that the combined ratio between losses and expenses is not exceeded. “You don’t have to be a genius to see that a company is losing money if the expense and loss ratios exceed the premium revenue. In any other industry, that would be called bad business.” By applying current management system technologies, and real-time interface through the Internet with its supporting brokers, which Johnston describes as a “virtual management process”, Markham plans on operating at an expense ratio within the lower 20% area — this compares with other company ratios of 27% and up. “I realized a long time ago that the way the market has been going, which is being driven by consumer technology advancements, means there is little room for adjustment on either premium or the loss ratio. This means the successful companies of the future will be those focussing on reducing the expense side of the business. It really comes down to price and service — however, if your competitor has a more cost-effective infrastructure, then even if you match the same prices and the same level of service, you’ll still come out behind in the game. I don’t plan on being in the rear.” After several months of intensive research and consultation with its initial broker supporters, Markham has developed an Internet-based company-to-broker real time system incorporating full access to claims and policy processing. Policies can be applied, issued and printed almost immediately if so desired. At a future point, Millennium and its solution providers may look at marketing the system to the broader industry, Johnston says. Johnston is particularly proud of the fact that Markham’s computer system and electronic support to brokers was designed according to broker needs. “Right down to the screens and on-line support, the system was designed to meet broker needs’ he adds. While it is still early days in the future of Markham, taking the market by the shirt-bottoms and turning it upside down is not good enough for Johnston. After a suitable period of establishing a trading history, he plans on taking Millennium Financial public. At the moment, the company’s shareholding is privately held, with the largest stockholders being a group of U.S. investors arranged by fund managers Dailey & Partners. The broker group supporting the company and management hold roughly 30% of the stock. Should the company apply for a listing, the stockholding of the original investors may change, Johnston says. In addition, he adds that Markham will most likely look at another private cash raising next year. The company is currently capitalized at $20 million. In concluding his comments, Johnston reiterates his confidence in the future of broker distribution. When Markham began taking form, the decision had to be made which distribution approach to adopt, he explains. Having analyzed the market and performance of the newer players such as direct writers, he concluded that the independant broker channel offered the greatest long-term potential in terms of competing on both service and price. “The idea was to create a Canadian company supported by Canadian brokers. The Canadian insurance market tends to predominately be a branch environment in that most companies are foreign owned, hence there’s not much sense of loyalty between the different partners. Markham offers brokers the opportunity to get a piece of the action and thereby instills a sense of responsibility to the business.” Save Stroke 1 Print Group 8 Share LI logo Most people in the industry think he has lost his marbles, launching a new property and casualty insurance company in Canada from the ground up in what is widely seen as an overcrowded and cutthroat market. To say that Brian Johnston, who was the president of Liberty Canada Holdings until resigning in early 1997, is “bucking the trend” would be a gross understatement. However, having the competition thinking “he’s crazy” is something Johnston is happy to live with whilst quietly but methodically setting up the national infrastructure for his new low-cost based company, Markham General Insurance Company. My career in the property and casualty insurance industry has at times, been difficult because I’m not the complacent kind,” admits Brian Johnston, who recently announced the start-up of a new property and casualty insurer, Markham General Insurance Company. With a long career dating back to the 1960s initially involved with claims management, Johnston has worked his way around the industry, from insurer to broker, eventually culminating in the 1990s with the presidencies of Liberty Canada Holdings and CIGNA Insurance Company of Canada. Johnston resigned from Liberty Canada in 1997 with the intention of retiring from the business. However, the blood of the industry clearly ran thicker through his veins than even he thought, and the concept of Markham Insurance began to take shape shortly thereafter. In two years, he proudly notes, Markham had been taken from concept through to finalization, with the company opening doors to personal lines business in Ontario this past October. Regulatory filings have already been processed across the other provinces, with plans to add commercial lines underwriting by February 2000. “When I made the decision to resign from Liberty, I really didn’t want to be part of another large corporation. I expected to retire, but the itch of what I had seen for some time in the possibility of launching a low-cost Canadian-owned insurance operation had to be satisfied.” And, modesty aside, Johnston is quick to point out that Markham probably would not have made it past the drawing board without the support of several people, the most important being John McGlynn, whom he had established a longstanding working relationship over the years. McGlynn has been appointed president and chief operating officer of Markham, and holds the same responsibilities in the holding company, Millennium Financial Management Ltd. If the start-up of a new insurer was not enough to have the industry declare Johnston as “otherwise”, the two-pronged strategy being applied by the company has raised more than an eyebrow or two. Johnston says Markham will focus primarily on lower density population areas with distribution through a closed broker network. The company currently has 20 brokers appointed, exclusively servicing area jurisdictions. Johnston expects to have up to 60 brokers representing Markham by the end of next year. And, while the insurer may consider approaching high-density centers such as Toronto in the future, the company will employ a different approach, Johnston says. “The one factor that will be a constant in any initiative will be consultation with our independant broker partners,” he adds. Which raises the second core focus of the company, to compete on a significantly lower expense ratio to its counterparts. Johnston points out, when you cut through all the layers of added management complexity, the basis of running a p&c company on a profitable basis really amounts to ensuring that the combined ratio between losses and expenses is not exceeded. “You don’t have to be a genius to see that a company is losing money if the expense and loss ratios exceed the premium revenue. In any other industry, that would be called bad business.” By applying current management system technologies, and real-time interface through the Internet with its supporting brokers, which Johnston describes as a “virtual management process”, Markham plans on operating at an expense ratio within the lower 20% area — this compares with other company ratios of 27% and up. “I realized a long time ago that the way the market has been going, which is being driven by consumer technology advancements, means there is little room for adjustment on either premium or the loss ratio. This means the successful companies of the future will be those focussing on reducing the expense side of the business. It really comes down to price and service — however, if your competitor has a more cost-effective infrastructure, then even if you match the same prices and the same level of service, you’ll still come out behind in the game. I don’t plan on being in the rear.” After several months of intensive research and consultation with its initial broker supporters, Markham has developed an Internet-based company-to-broker real time system incorporating full access to claims and policy processing. Policies can be applied, issued and printed almost immediately if so desired. At a future point, Millennium and its solution providers may look at marketing the system to the broader industry, Johnston says. Johnston is particularly proud of the fact that Markham’s computer system and electronic support to brokers was designed according to broker needs. “Right down to the screens and on-line support, the system was designed to meet broker needs’ he adds. While it is still early days in the future of Markham, taking the market by the shirt-bottoms and turning it upside down is not good enough for Johnston. After a suitable period of establishing a trading history, he plans on taking Millennium Financial public. At the moment, the company’s shareholding is privately held, with the largest stockholders being a group of U.S. investors arranged by fund managers Dailey & Partners. The broker group supporting the company and management hold roughly 30% of the stock. Should the company apply for a listing, the stockholding of the original investors may change, Johnston says. In addition, he adds that Markham will most likely look at another private cash raising next year. The company is currently capitalized at $20 million. In concluding his comments, Johnston reiterates his confidence in the future of broker distribution. When Markham began taking form, the decision had to be made which distribution approach to adopt, he explains. Having analyzed the market and performance of the newer players such as direct writers, he concluded that the independant broker channel offered the greatest long-term potential in terms of competing on both service and price. “The idea was to create a Canadian company supported by Canadian brokers. The Canadian insurance market tends to predominately be a branch environment in that most companies are foreign owned, hence there’s not much sense of loyalty between the different partners. Markham offers brokers the opportunity to get a piece of the action and thereby instills a sense of responsibility to the business.”
