Free The Butcherbird by Geoffrey Cousins

hundred and three per cent. While this is common in the industry it is apparently of great concern to him. He was directing his remarks to the twin questions of pricing and costs in addressing this issue. I trust this is an accurate summary?’ Sir Laurence gestured vaguely in Jack’s direction.
    ‘Yes, Mac. I know some insurance companies lose on every policy they write and make their profit on investing shareholders’ funds, but to me it’s a dangerous way to run a business and I’m not comfortable with it. We’ve got to look more closely at how we price risk. There might be a percentage of our book we want to discard because we can never make money on it and some business we want to keep but reprice.’
    Mac’s voice echoed from the doughnut. ‘Hang on, my friend, you’ve got to tread carefully here. The market won’t like us writing less business just because we think we’re going to make more profit somewhere down the track. They want growth. But I thought I heard you talking specifically about the cost side.’
    Jack’s enthusiasm began to rise. ‘Absolutely. There’s so much we can do there. Not just with internal costs, although I’m convinced already we can take eighty to one hundred million out of those, but on the education side, with our policyholders. If we can teach them how to better secure their homes, we reduce the incidence of burglary. And more, if we can work with local communities and the police on drug rehabilitation, we can help to treat the cause. If we can convince local councils to use our rating information and rezone likely flood areas, or change the building codes for hurricanes and severe storm areas, we can reduce claim costs and help our customers at the same time. Because that’s what insurance is all about, as I see it. Just a spreading of risk across the community so one family’s disaster is shared by everyone else.’
    There was silence in the boardroom and from the speakerphone. Finally, Sir Laurence spoke. ‘Are you still there, Mac?’
    ‘Yes.’ A short cough. ‘Yes, of course, Laurence. Chairman. Just thinking about Jack’s comments. Very commendable sentiments. Very much in line with my own thinking. Of course, you have to balance these long-term aims with the short-term interests of the shareholders. As directors, I think that’s where we have to look, is it not, Chairman?’
    ‘Indeed. The Corporations Act requires us to represent the interests of shareholders at all times.’
    ‘Just so. I’ve heard you say that many times. So, Jack, it’s quite right of you to raise these matters and commendable that you should get on this track so quickly, but we must plan carefully and slowly to strike the right balance of interests. Everyone agree?’
    There were murmurs from around the table of an indeterminate nature, as there usually were when Mac put this question. No vote had ever been taken in this boardroom, no clear dissent ever expressed.
    ‘Excellent. So I think we’re all agreeing with you, Jack, just expressing a note of caution. But didn’t I hear you mention specifics on the cost side?’
    Jack drew a deep breath and coloured slightly. ‘I’m not sure you are agreeing with me, Mac. It’s clear as day to me we need to move ahead on all this immediately and in the absolute interests of the shareholders. Our investment returns have been behind the market lately and I’m still trying to understand how our profits are increasing at such a pace.’
    Now it was very quiet and still in the room. No one shuffled papers or fiddled with pens. Even Shane O’Connell, who was usually prodding at his electronic organiser with a stylus, sat with his palms flat on the table. Jack continued.
    ‘Frankly, I see the cost side as the easy part. For instance, we seem to spend a fortune on consultants. I’m certain we can slash that in half. I don’t even know what they all do yet, but I’ll have a detailed analysis for you by the next meeting. And the other example