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Business Review 2006 from
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Avoid the 'can of beans' solution
Paul MacDonald
managing director, Hepburns Insurance
Did you see Jeremy Clarkson test-driving the Bugatti Veyron?
This is the fastest and most expensive road car built to date. Priced at £810,000 and capable of speeds of up to 252mph, it can do 0-60 in three seconds.
If you watched the Top Gear programme you, like me, would have smiled when Mr Clarkson rang an insurer while driving the car and said: 'Please quote me happy.' There was not much chance of solving a problem like that using the quote-me-happy route and so it transpired that after holding on the phone for a considerable time, the answer came back: 'Sorry, can't help you.' I doubt that Mr Clarkson genuinely expected a quote and was probably poking some harmless fun at the part of the insurance spectrum that one might call the commodity end.
Most of us need and use the commodity end of the insurance market from time to time. We often regard insurance as a necessary burden so let's buy the product as cheaply as possible - hence the endless phone carousels and factory-type experience. As you move away from this end of the insurance spectrum you will find that the skills and knowledge will grow. At the other end is a highly skilled and sometimes complex arena of risk identification, calculation and response. We have both ends of the insurance spectrum in the Channel Islands but, in my view, it is with skills that the industry's future will prosper.
Take for example the success story in our sister island. One has to applaud Guernsey for its vision and determination in developing its own particular skills-based offering. Guernsey is now the most important captive insurance centre in Europe. This adds value to that island's international image as well as adding value in terms of employing local people paying local tax.
Jersey should do the same, not by trying to copy but by innovation. Its encouraging to see the Island do precisely that and produce its own version of a PCC (protected cell company) and I hope that this does find some significant application for insurance. It's certainly a positive step forward.
For those of you who are involved with purchasing insurance on a corporate basis you will I am sure have had a very mixed experience when dealing with the insurance spend. You may even have had an unpleasant experience when submitting a claim, which is the acid test of any insurance. Often an off the shelf solution (a can of beans if you will) does not fully meet expectations.
Promise
Remember insurance is also a piece of paper and a promise, it doesn't really matter how it is priced if it doesn't do what you expect it to do.
Consider this, if you run your business as though it is self-insured and nurture a culture of ownership at every level you will be treated far more sympathetically by insurers and pay a much lower cost for risk in the long term.
If you already do this then I am preaching to the converted. If you are unclear by what I mean then you need a Professional to help you.
Someone who will try and understand your business and work with you to find the best way to manage and where appropriate transfer the risks to insurance and not someone who is going to sell you an off the shelf product. That process is called risk management.
So where are these skills? A lot closer than you think. There are some very good insurance professionals operating in the Channel Islands. You don't always need to go to London, you don't need to buy into the propaganda that only people working in the City know what they are doing.
Use the skills that are around you. I am a firm believer in the Jersey Chamber of Commerce's mantra keep the business in Jersey, encourage it and support good local companies as you are ultimately protecting your own.
Business can be tough, we all know that but its when the going gets tough that skills count. It is the ability to think outside the box that differentiates the professional from the amateur. Long live professionalism and skill!
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