By eleven that morning, Ashby had finished wading through the contract papers in which Nigel Black as Stirling’s underwriter, had agreed to insure the Captain Stratos for its hull, machinery and engines. The crew and cargo were covered separately in policies with other insurers.
Ashby had seen what he expected to see : a half page summary of the contract terms and conditions with Stirling insuring one hundred per cent of the risk. Attached to this was a glossy brochure with an enormous amount of guff from the brokers. It described the professionalism of the shipowners, technical details of the superb condition of the ship, certificates about the inertness of the cargo for a succession of voyages during the year and references attesting to the experience of the ship’s master and its Philippino crew : in short, there was nothing that would provoke any questions being asked by Stirling to the broker, City First.
To the trained eye, it looked too good. This could have been the reason why Black had asked the broker to obtain a maritime survey report – the ship was getting on in years. Or perhaps it was either Black or Grant trying to cover their backs. A number of ferries had been sinking around the Greek Isles. Even Ashby, a non-mariner had seen these reported in the insurance newspaper, The Shipping List. Thus, it was no surprise that Black had wanted to know more about the risk he had been asked to cover.
The file showed that the survey had been delivered in glowing terms. Black had obviously thought there was enough in what he’d received to hang either Grant or the surveyor or both of them, along with the shipowners if he’d been in any way misled. With this semblance of propriety, he added his ‘scratch’ or signature to the policy.
The full amount of cover for a total loss was twenty million pounds.
Black had never dealt with Grant before and was uncertain if he could trust him. For all he knew, Grant’s broking information might have been flawed. Grant might have been careless and failed to include some crucial information. The Stratos might really be a rust bucket. So, the premium had to be high enough to allay these fears.
Looking at the paperwork, Rob Ashby knew how versatile brokers could be in getting underwriters to sign on the dotted line. The risk information could range from notes and figures scrawled on the back of a beer mat or a cigarette packet, right up to conference presentations and long-winded technical reports.
Some underwriters gave short shrift to brokers they didn’t usually deal with or on business unfamiliar to them. Others were known on occasion to take any risk put in front of them if their monthly premium income target was on the low side. Invariably, they finished up as brokers themselves after their portfolio burned through twice the amount of premium they received – in claims.
Thus, the art of underwriting, for some, was a game of chance, governed by greed and fear in the market. If an underwriter was too cautious to take on risks which could generate claims, he would never get any business. Conversely, if he was avaricious and wanted to bring in as much money as he could at the highest quotations, he would be rich in the short term but in the end, go bankrupt.
Having grown up on stories of sloppy underwriters gone bust, Robert Ashby was determined not to be one of them. In his final years at school, he’d taken a close interest in his father’s underwriting and watched how he handled brokers and clients.
At the time, it had looked a bit like horse-racing : if there were jockeys and horses who usually won, even though their odds were lower and the winnings were less, then they were a safer bet than those at longer odds and higher prices. Far better to finish the day with something in your pocket than with nothing at all.
Having finished looking through the files, by a quarter past eleven, Ashby was walking with Whittingham down Fenchurch Street, across Eastcheap and down to Lower Thames Street to reach Thomas’s office at Brewers & Millers Wharf overlooking the Thames.
“This is going to be a waste of time, not to mention what it will cost,” moaned the claims manager. “I’m yet to meet a lawyer who can give me a straight answer whether we’re going to win or lose or how much it’s going to cost or how long the case will take to be finished.”
“I saw from the file that you picked Thomas’s firm yourself to run our defence,” said Ashby. “If you’re not that impressed with them, why are we using them ?”
“Oh, they are good – as far as it goes. But when you look at firms of lawyers side by side, they’re all the same. They’ll tell you the pro’s and the cons but if the coin lands the wrong way up, they’ll sympathize with you but it won’t make their bill any less or the result any different. At least, this lot know how we work. The worst ones pretend they understand how a contract ticks over but don’t have a clue. So, not only do you end up having to explain the basics to them, you also have to pay them for the learning exercise at your own expense.”
Whittingham had grown tired of his bosses (including Jim Ashby) berating him for using lawyers who were too expensive or didn’t get results or who over-charged. Justice and ‘the law’ were mutually exclusive.
“Perhaps it’s the fault of the system ?” said Ashby.
“Maybe. Maybe not. All I know is that we’ll be lucky to get away from this little outing in the Stratos case with a bill for less than six figures – that is, if Plantation hasn’t gone bust in the meantime.”