Two Marine Insurance Tales
by John Delach
Bribing V. the Underwriter
Once upon a time a chap I shall call, V. became the leading underwriter on the really Big Oil and Gas Company’s (BO&G) insurance package. V. who worked for a Scandinavian insurance company was a fairly unsophisticated insurance man who didn’t understand how the complex insurance clauses worked or how they came into existence. V. decided to challenge them and it was my responsibility as BO&G’s broker and account executive to solve this dilemma.
Repeated attempts of negotiating by telephone, telex, fax and mail failed to bring us satisfaction so I arranged a face to face meeting to resolve these issues. We agreed to meet in Oslo, Norway. I did not want to meet in the formal setting of V’s office so I convinced him to meet at the Grand Hotel.
I traveled from New York with four other brokers each who was an expert on one of the types of coverage that the policy provided, onshore property, offshore property, casualty and marine.
I instructed each broker to purchase two .750 liter bottles of Johnny Walker Black Scotch whiskey at the Duty Free shop in JFK International Airport before boarding the flight to Oslo. This was the legal limit for each traveler to bring into Norway and I did likewise so that we accumulated ten bottles of J.W. Black.
I was not planning a drunken orgy. Liquor is heavily taxed in Norway making it almost worth its weight in gold.
I also arranged for a large comfortable suite for myself with an oversized table where I would host the meeting. When V. arrived I lined the ten bottles of J.W.B. on top of the fire place mantle and explained, “V. each time we reach agreement on the wording of a disputed clause, one of those bottles of Johnny Walker Black is yours.”
As God is my witness, ole V. began to salivate.
As soon as we finished explaining the entire rationale for the first disputed clause and fended off V’s objections, it was amazing to witness the furtive quickness that V. demonstrated as the first bottle disappeared into his travel bag.
Long story short: If you were counting bottles of Johnny Walker Black, V. won. Otherwise, it was our game set and match.
Some years ago we possessed two ponies for the kids. The insurance costs were quite high and it struck me that a better home for the insurance would be with marine underwriters – there are sea horses after all – rather than the avaricious livestock market.
Having selected a friendly Lloyds’ underwriter, M.L. for this exercise on the grounds he was a free thinker, I found he was happy to accept the formal livestock policy wording and he set a premium, I think, of about £750. While this was fairly competitive I tried to get this reduced and he came up with the suggestion we should toss a coin which if he won he got the 750 and if I won he would get 550 creating a spread of £200.
After accepting this deal I found the audience surrounding his box had grown and I asked Roger Tyndall if he would act as “Tosser”. Before Roger swung into action it suddenly occurred to me I ought to protect the spread if possible in a less formal way and, as another broker, John Lloyd, was passing, I asked him if he would care to a take a share of the spread on a new policy form we called “Toss Total Loss”.
It seemed fair to me to offer a rate of 50% on line which he readily accepted. His 10% line was quickly followed by others and my £200 exposure was thus reduced to 100 at worst.
A breathless hush as the coin rose into the air. It fell and I lost. My collection of these informal Toss Total Loss reinsurers, being gentlemen, paid out and all were reasonably happy.
Alas this arrangement lasted for only three renewals as my luck remained poor and I failed to win the toss each year. My supporters grew cross with my inability to win the coin toss and my Toss Total Loss market finally dried up.