IT Interviews: Vern Chalfant, McLarens Young International

As a keen tennis fan and accomplished player in his own right, Vern Chalfant’s visit to London during Wimbledon fortnight looks very well timed.

But, as it turns out, the McLarens Young International (MYI) president and chief executive didn’t have a chance to fit in even a few hours at SW19 on his trip to London last week. “I would have loved to go see the tennis but had no time at all unfortunately,” says the head of the world’s third-biggest loss adjuster, having found some space in his crowded diary for Insurance Times.

Instead, Chalfant’s time was fully occupied in monitoring progress at MYI’s fast-expanding European operation. It is less than five years since the Atlanta-based company opened up a UK operation.

Investment 'paying off in spades'

For the previous five years, MYI had been unable to pursue domestic British business due to a non-compete agreement with Capita following its merger with UK adjuster McLarens International in 2001. MYI bought the firm’s international business, while Capita bought McLaren’s UK operations, with the latter barring the US company from working in Britain.

Since the appointment of Trevor Latimer as MYI’s UK head in October 2006, when the agreement expired, its UK business has grown from what Chalfant describes as a “standing start”, with just three adjusters, all servicing foreign losses. Now, with 11 offices and more than 50 staff, MYI claims to be the UK’s fifth-largest loss adjuster.

“The growth has been spectacular, and it’s been predominantly UK business or UK accounts that have operations around the world, which has fed our offices around the world,” says Chalfant, a trained accountant who entered the industry after working for the insurance arm of Citicorp bank.

The expansion of the UK loss adjusting operation has been MYI’s biggest single investment in recent years, he says, adding that “it’s paying off in spades” now. The performance of MYI’s UK operation is ahead of that of the company worldwide, which last year saw increased revenues of 11% and profits up by a third.

“It’s been probably the number one success story of the investments we’ve made in the last five years. That’s not an easy achievement at any time, and to do it in three or four years is a pretty phenomenal accomplishment,” he says. “The first two months of this year is substantially ahead of last year, so the growth doesn’t appear to have slowed any – it appears to have picked up pace.”

Quality people, quality service

So what’s the secret of success in loss adjusting? It’s simple, says Chalfant. “People: you get the right people, who know the market and who are committed to quality service, and it carries on from there. I’ve been with the firm since the early 1990s and our whole focus since then has been to find quality people. If you’ve got the best people on the street, the clients will follow.”

But MYI is only interested in the finished article. “Young for us is mid-30s. We won’t hire them at 21 or 22, because they won’t have enough experience to do the job,” he says, adding that MYI’s loss adjusters have 23 years’ experience on average.

The kind of work that MYI targets – higher-end adjusting for commercial or high net worth clients – demands this approach, Chalfant argues. “We tend to handle higher value claims, which require experience. We typically do not hire people and train them. We take people who are experienced people with a reputation in the marketplace. Our brand stands for quality: anything we do which takes away from that takes away from the value and our prospect of getting a new client.”

Offering the right carrots

But finding the right people is challenging, and not just in the UK. Chalfant says that a shortage of high-quality, experienced loss adjusters is a global phenomenon. As evidence of the firm’s commitment to quality employees, he points to a statistic: out of the 14 individuals aged under 40 to have attained the Chartered Institute of Loss Adjusters’ highest qualification, four are working for MYI.

But isn’t this an expensive approach?

“It’s not a huge issue. We are generous about compensation as long as it’s the right person,” he replies, arguing that the firm’s employee ownership structure is a powerful carrot.

“They are working for themselves at the same time as they are working for us. We have a lot of people who have their own customer base and their own reputation in the marketplace. They don’t need daily supervision and they are not just employee 3,415; they also own a part of the company. People know it’s a good environment to work in and they know they have a shot at becoming an equity owner in the business.”

Considering consolidation

Despite the wider skills shortages, holding onto quality adjusters is easier than it used to be, he notes. “We’re not seeing as much movement as in the ’90s, when people were hopping around all over the place.”

The consolidation of the loss adjusting sector over the intervening period has helped, because it means ambitious individuals have less big players to choose from.

“Accounts are definitely becoming more global,” he says. “It’s a trend that started in the mid-1990s and it’s continuing. [Global companies] want somebody controlling the account who can quality control around the world. It has reduced the number of relationships. The logical step is to get one loss adjuster nominated.”

Chalfant expects to see consolidation continue. He says: “There have been a number of private equity transactions in the last few years and that will drive acquisitions. We are definitely looking to be a consolidator.”

Keep on expanding

And MYI is mirroring this trend with a rapid worldwide expansion, most recently breaking into the Indian market by forming a joint venture with venerable Mumbai-based Lloyd’s agency Wilson’s Surveyors. The company has just opened its 11th office in China and, continuing the BRIC theme, MYI has also just received approval to operate in Brazil.

Back in the Old World, MYI has also recently opened offices in Spain, Ireland and Italy. “The UK operation has gained a number of pan-European accounts, which is adding to our need to expand,” he says.

It looks like finding time to pursue those leisure activities will prove challenging chez Chalfant for some time to come.