Games master

PB: Describe your company.

Shah: The Character Group is engaged in the design, development and international distribution of toys and games. The business was founded in 1991 and is AIM-listed. Character's sales in 2006 were £95m, of which £69m related to its core toys and games business. TCG's products are character-linked, including Scooby Doo, Spiderman, the Spice Girls dolls and Toy Story: the group is well known for its range of BBC-licensed Doctor Who toys. Our head office is in New Malden, Surrey, and its main operation is in Oldham, Lancashire. There are offices in Hong Kong and Shenzhen, China, and we employ around 160 people.

PB: Who places insurance at your firm and what kinds of cover do they place?

Shah: I have responsibility for all the finance and administration functions, including insurance. The Character Group purchases commercial insurances including global product liability, cargo, directors' and officers' and the more conventional property and liability covers.

PB: Describe your relationship with your broker.

Shah: In the mid 90s a consignment of toys was destroyed when the fireworks the ship was carrying set light in the China Sea, costing around £200,000. Our broker - Dickson Insurance Brokers - attended every meeting with the adjusters, a level of service I think businesses want. It's important to have a main point of contact, whether it's the security on a new warehouse, managing meetings with business interruption surveyors or overseeing claims matters. We have had product liability claims caused by misuse and occasionally through component or manufacturing problems. It's vital to feel comfortable that your brokers and insurers know what they're doing and act quickly. Aside from regular telephone contact, meetings are held each quarter and outstanding claims are reviewed frequently.

PB: What do you feel about the insurance cycle?

Shah: We pay more than we should in a soft market, possibly, but in a hard market we probably pay less. The minute we focus purely on price we reveal an underlying insecurity about the competence of our insurance partners. We expect our broker to find the best deal, commensurate with preserving good quality relationships with the insurers that know us. To a great extent we leave this judgement to them; it's their job. We won't go shopping around unless we think they aren't providing the service we expect. This includes responding proactively to changes in the cycle.

PB: What cover could be added?

Shah: One risk not covered as we would like is product-recall insurance. We took the decision to self-insure much of this risk, however, the well publicised recalls that have affected companies such as Mattel, and to a lesser extent ourselves, suggests that we might be better off if we had much higher limits.

PB: What is the greatest risk factor facing your corporate environment?

Shah: Recalls of products made in China. Although it is a small percentage of production, the frequency of recalls means consumers perceive that all products from China, which has 80% of the world's toy production, are faulty. The EU is about to conduct an investigation into quality issues affecting the toy industry over there. There is no other viable source and the majority of toys are safe, so how can we communicate this to consumers?