Jim Penman (Jim's Group CEO) describes Jim's Insurance's role as a broker that enforces compulsory public liability insurance for franchisees and actively manages claims to reduce large/loss-making payouts. He contrasts prior poor brokers with their current hands-on service model—advocating to underwriters, approving many claims quickly, and imposing targeted excesses (e.g., $5,000) to deter problematic claims. Penman also cites operational facts used to negotiate better terms (franchisee turnover ≈ $3,000/week, 5,000+ covered people) and emphasizes that $10 million public liability is mandatory to protect the network and customers.
Questions this video answers
At least $10 million public liability.
A $5,000 excess (replacing a previous $500 excess in some cases).
Close to $3,000 a week on average.
5,000 plus people.
A 12-month 'new for old' guarantee (described as unrealistic).
Chapters
Well, originally we were dealing with another broker and we found them so incompetent just in terms of billing and in terms of renewals and in terms of paying claims. They were really, really slow and bad. And also, it's very important to us to make sure that all of our franchisees have public liability insurance. The reason for that being that somebody can take out insurance through another company, show us the certificate, cancel the policy a month later, get most of their money back, and then they get a $5 million claim. So we have to be absolutely certain that every one of our franchisees has at least $10 million public liability. They have to have it. We don't even allow a franchisee to be suspended without insurance because they could legally start working and they could still be legally a franchisee. It puts the company at risk. We did find quite a few franchisees did not have public liability insurance, which really was very, very dangerous from us also, potentially, of course, for customers, because if we can't pay, they could have damage done and we couldn't fix it because we don't have the money to do it. Well, our franchisees get a very good deal. One of the reasons for that is that we actually manage claims. So, for example, we had a situation in the beginning where a mower was guaranteed new for old 12 months. Now, that's a ridiculous statement because any mining contractor knows you've used a mower for 12 months, it's really worth almost nothing. So we actually did things like that to reduce, might say, fraudulent claims, because otherwise we had a situation where somebody would go for 12 months and then suddenly they'd say all their stuff was stolen. It's just too suspicious. So we actually made it reasonable. And things like, for example, we found that franchisees were using the wrong chemicals on services and causing massive damage. So we actually said to them, if you cause this kind of damage by using the wrong chemicals, then instead of $500 excess, you pay $5,000 excess. And basically the claims vanished overnight. Also, builders clean. Now, builders clean is a big problem for window cleaning because people go in and the windows are scratched. Now, if they continue to wash all the windows, there's no proof who did it. So we put a $5,000 excess on that one and now it doesn't happen anymore because as soon as a franchisee finds scratching on a window, they stop, look immediately and say, these windows are scratched. I'm not continuing. And then we can prove it's not us. So by doing this, we've actually kept the. By getting rid of Foolish big claims. By changing our training and our systems, we've actually managed to keep our claims modest. And of course, by keeping our claims down, working with the underwriters, then we get a better deal for our franchisees. Yeah, it's a great policy because we know our franchisees make good money. That's the big difference. If you're out there, isn't independent, you may be making almost nothing, but it's exceptionally unlucky. Our franchisees turn over close to $3,000 a week on average, and there's very, very few that make little money. So we actually presented this evidence to the insurance company and said, if you're a Jim's franchisee, you must be making a decent living. For a start, they wouldn't be paying ongoing fees because they weren't making enough money. So they got the insurance company to agree, no proof of income needed. Well, we've got policies for car insurance, for house insurance, for other kinds of products. For a long time we didn't have great deals and to be honest, we weren't that competitive. But we've now got much, much better deals. We are comparable with bulk insurers. And the big difference with us too is that it's very, very personal. It's not like some automated thing with a computerized system you have to block into. If one of my franchises complains to me that their insurance policies aren't being actioned, I would take go down phone in hand to the insurers, to our insurers, and I would say, yaddy's just over there, he's just smiling. And I will say, why isn't this person being looked after? Why are these claims being delayed? Still off the road, needs his trailer. Get it fixed and then it just gets fixed very, very fast. Also, sorry. I might say one other thing too, is that if we have a case where we believe the franchisee is in the right or anybody else, we will actually do battle with the underwriters on their behalf. We say, this is a fair claim, we want you to fix it. We don't want fraudulent claims, we will track down it. But if it's a fair claim and the insurance comes being difficult, we will fight it. And we will say, we have 5,000 plus people using this policy. Come on, we're a good client. Put this one through for us. And very often they'll listen. Yeah, that's a very important issue because when you're turning over $3,000 a week and you've just had a theft, if you delay the claim for a month that's actually cost that person $12,000. Then that franchisee or that contractor goes back on the road immediately. We are a broker, not an underwriter. I wouldn't mind being an underwriter actually, but it's hugely difficult to get into that area. So we're a broker. We act on behalf of our clients with the underwriters, which also means we can play underwriters off against each other so we can actually look at different underwriters and get the best possible deal for our people. We also though, as a, as a high level broker, we have claims approval for the great majority of claims. We can just pay them on the spot and pay them very fast. The value of our insurance is for a start, we will fight on behalf for a reasonable claim. If you deal with anybody else, they've got no interest. You're only one, you're only one customer. With us, you're 5,000 plus customers. So we have a lot more leverage. And also we act very, very fast. We know that every day one of our franchises off the road is lost income and the lost income can actually be more than the value of the claim. So it's really important to get it. And you've got someone to speak to. It's a live in person people. You've got Yadrin, who is 20 years, 35 years in the insurance industry and with us, how long? Azrin? 12 years. So we've got somebody very experienced handling claims and he knows that he's responsible to making sure it's done right. So we actually give very, very good service, far better than we were getting from our previous brokers. I have to say every franchisee has my phone number, every franchisee has my email address and they are not hesitant to come to me as any issues at all. And I will directly speak. I see this guy every day. So you can't hide chimpanzee insurance, can you? Because my franchisees are my clients, they're my extended family. So if they've got some problems, I want to fix them. So we've got a lot of power. I'm very pleased with the level of service that we offer. I know people who use other insurers and they're not. And then, and they're really not that good. One interesting thing about Jim's Insurance is we are frequently faced with a franchisee who says, hey, I've got a better deal on my mowing insurance, I want to deal with this other company. And then I say to them, okay, what does your policy cover? Well, mowing lawns. Okay. What if you're gardening? What if you're moving rubbish? What if you're taking guidance? Oh, that's not covered. Really? So the point about our policy is we've never yet had any franchisee ever who's been able to show a better rate. It's really a good deal and it's for the benefit of franchisees. It's absolutely compulsory to have public liability insurance with us and to maintain it even if you're suspended. We cannot put the company at risk by allowing not to happen any other policy, like tools, trailer accident, car, house optional. You don't have to do through us. We've got great deals. I think you should deal through us because you'll get better service, you'll get good rates, you'll get payout. Insurance is only good as a payout. You can have the best insurance in the world. They don't pay you for a claim on some technicality. It's a bad thing. So there's many reasons for using us for other forms of insurance, but the one insurance you must have is public viability, because that protects the company, protects your fellow franchisees.
