Product Development Insurance

Case Study

“Cobine Carmelson’s knowledge is second to none. They get to the heart of the matter fast and are completely commercially focused, understanding the complicated environment we trade in. They are not just an insurance broker, ultimately they are an additional member to the team and a flawless one at that.”

Gareth Tillbrook

Managing Director

The introduction

Gareth was introduced to us by Ray at a time when Ray was particularly happy with our services. The vast majority of our clients do not suffer any claims whatsoever, maybe that’s because of us? More about that later.* However Ray had his largest client chasing him for £90,000 after goods Ray had bought in good faith caused significant damage at his client’s factory. It may not have been Ray’s fault yet he was being held responsible. In theory, his client could have withheld what he owed Ray, which could have broken his business completely. So he definitely got a good night’s sleep when I reassured him that the £90,000 was going to be paid for by his insurance company.

Gareth wanted the same sense of security because the same issue could happen in his business. So we met and made sure that we understood his business, to a level that Gareth was happy with. Some call it granular. The more we know, the easier it is to find the right insurance policies. Gareth also had his own view of what type of outcome he wanted, every business owner does. It’s important that we understand the requirements of a business and the people within it. If the people aren’t going to engage with risk management, the owners need to know about it and find another way to manage their risks.

The meeting

When we met it was clear that Gareth knew what he wanted an insurance company to do. They needed to pay for replacement stock when imports went missing as well as paying Gareth’s invoices when goods that were sold didn’t make it to the client. They also needed to pay out if Gareth’s clients went bust. A real risk with the global recession quickly followed by Brexit. Anyone that is owed significant amounts of money by their clients is at risk of cash flow being dented. I don’t know many businesses that have a slush fund to cater for such shocks. Banks used to help out with overdrafts and loans yet that doesn’t happen anymore. Banks are too busy trying to tip businesses into the red so their cronies can strip the assets. But that’s just my opinion.

However, the issue that could really break Gareth’s company was similar to Ray’s, which is why he invited us to meet him in the first place. It’s hard to refuse a meeting when someone already knows what type of service you supply. Gareth sources products for people with particular needs. From coffee cups, to kids toys you may well find had one of Gareth’s products in your hands, your house or your neighbour’s house. If the product ends up causing an injury or damage, Gareth needs to be protected. Regrettably, some Christmas tree lights, hover boards or phones do cause fires and children do put things in their mouths when we wish they wouldn’t. Whilst all the latest technology is used to prevent such horrific issues, accidents happen.

The solution

After negotiating with underwriters at insurance companies we selected the options that matched Gareth’s requirements. We then explained the highlights of each to Gareth, as well as the “red flashing lights” so he could budget for the risk management procedures he would need to compliment the insurance. We met again, together with one of the underwriters, to ensure Gareth and his FD had a full understanding of the small print. This included all the terms, conditions and exclusions that had been applied. Which is possibly why Gareth considers us a member of the team. Because we tell our clients the good and the bad news, then work as a team to find ways to ensure the small print doesn’t cause a problem.

Top Tip

Some people have told us they were going to rely on their invoice financing provider when things got drastic. It was heartbreaking when they rang back to ask for help because their invoice finance provider had also sold them an insurance for bad debts, which refused to pay out when they most needed it. They should stick to invoice financing and leave insurance to insurance people.

Wrap Up

Small print can be seen as an enemy yet there’s a lot that can be learned from it. Read our blogs on “Comprehensive” and “All Risk”. I used to be surprised at the number of people that told me that they had already covered everything, then sent me documents riddled with exclusions. I now know it is a common occurrence in our sector. Some people find out when it’s too late.