BC Business
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Brian Young stepped out of his comfort ?zone in banking for a temporary secondment in insurance; 13 years later the president and CEO of Canadian Direct ?Insurance is having ?the time of his life. Brian Young is an unlikely business hero. By his own account, “a born and bred banker,” he spent most of his life studying interest rates and amortization tables. He can’t figure out why anyone would want to profile him.?
Brian Young is an unlikely business hero. By his own account, “a born and bred banker,” he spent most of his life studying interest rates and amortization tables. He can’t figure out why anyone would want to profile him.
His banking career, however, took an unexpected turn in 1998 when Young’s employer at the time, HSBC Bank Canada, asked him to step in and take a look at its floundering consumer insurance division. At the time, the career banker hardly envisioned himself as a maverick gunslinger charging to the rescue. For Young it was just another problem to solve, another calculation of costs, risks and rewards.
It was an exciting time in the insurance patch when HSBC launched CDI in 1996. The advent of the personal computer had turned traditional underwriting on its ear, paving the way for a new, direct-to-consumer delivery model. But even more importantly in Canada, a 1991 revision of the Bank Act allowed Canadian banks to own insurance companies, introducing a crack in the long-standing barrier separating the two industries. While considerable restrictions remained, there was a feeling in the air that the lucrative personal insurance sector – known in the industry as “personal lines insurance” – would soon be thrown open to competition from banks.
“The long-term play is that at some point in Canada they’re going to allow for wider distribution of personal lines insurance as a public policy,” the 59-year-old Young explains. “Certainly back in the ’90s there was a great movement and a feel that that might happen.”
It didn’t happen, however. Regulatory reform stalled in its tracks, and banks today are still prohibited from selling financial and insurance products under one roof or even marketing the two together.
By 1998, two years into its experiment, HSBC’s foray into consumer insurance had stalled. Young initially accepted a temporary secondment from the HSBC commercial lending office to act as COO, but by 2000 the insurer was still losing about $10 million a year, and it was clear that tinkering with systems and operations wasn’t going to stem the losses. “So the bank asked me, What are we going to do? And I said, Well, I’ll fix it,” Young recalls. He was named president and CEO in May 2000.
“I slowed the company to align costs with revenue,” he explains. CDI had been growing at a frantic pace, adding about 25,000 automobile policies a year since its inception. Young slowed that pace to a more manageable 10,000 a year. Next came diversification. When Young joined CDI, B.C. auto insurance accounted for about 95 per cent of its business. Under his leadership, the company added home insurance and expanded into Alberta auto insurance. Today each of those three product lines accounts for about one-third of CDI’s business.
Eleven years after he took the helm, CDI has diversified its product mix and in the process reversed its losses, notching earnings of $12.4 million on $111 million in premiums in 2010.
CDI still lays claim to only 2.5 per cent of the market for optional auto insurance in B.C., yet the number of policies has continued to rise steadily, reaching 185,000 in 2010, compared to 75,000 when Young took the helm in 2000. (ICBC still claims the lion’s share of optional auto insurance in B.C., with all private insurers together claiming only about 11 per cent.)
Young remained with CDI when HSBC sold it to Canadian Western Bank in 2004, and growth continued unabated. He reports that revenue and profit have risen steadily for the past nine years.
For Young, it’s been a long journey from his prairie roots in Saskatoon, where as a boy he always dreamed of a career in banking. “I’m a Saskatchewan boy, born and raised,” he says. “I’m from a big prairie family that believes in hard work.” A finance degree from the University of Saskatchewan led him to positions with small banks, which merged with bigger ones until he found himself with HSBC, which moved him to its Canadian head office in Vancouver in 1993.
Reflecting on his mid-life career switch, Young has no regrets. “In my past as a commercial lender, I’d give advice to people,” he says. “You would read about it in theory; I studied it in school. But this was an opportunity to actually execute something in a concrete way. And it became . . .” He frowns, momentarily at a loss for words. Then he looks up, seemingly catching himself by surprise. “It became . . . fun.”