Danny heads up D&O, E&O and Cyber in the US for Trans Re, one of the market leaders in each line. In this episode we run through all the big issues in D&O:-Silicon Valley Bank and bank runs and how Directors and Officers liability underwriters are incorporating lessonsDana Hojnowski’s favorite claim. (0:00)What’s wrong with securities fraud allegation? (2:42)How do you know when a company is violating their duty of care to their shareholders? (5:14)What are the lessons learned from Silicon Valley Bank as an underwriter? (7:51)What would happen if a company didn't buy D&O? (9:36)How is the US different from other countries in D&O litigation? (13:00)D&O and crypto (15:13)The resolution of the D&O puzzle of Special Purpose Acquisition Companies (SPACs)? (18:28)Where has insurance made better risks? (24:19)The cyber loss is going to come from someone trying to hack you -. (25:59)How did you get into this kind of business where you're from? (28:11)youtube: https://youtu.be/6XLjsp67UFETwitter: @davecwrightSurprise, It's Insurance mailing listLinkedin Social Science of Insurance Essays
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Death Spirals and Other Selection Problems with Amy Finkelstein
Amy Finkelstein is Professor of Economics at MIT. Amy’s research focuses on market failures and government intervention in insurance markets and she has won numerous awards include a MacArthur Fellowship and the John Bates Clark Medal. Amy is co-author with Liran Einav and Ray Fisman of the forthcoming book: “Risky Business: Why Insurance Markets Fail and What to do about it”.Buy the bookhttps://www.amazon.com/Risky-Business-Insurance-Markets-About/dp/0300253435/Amy on wikipedia https://en.wikipedia.org/wiki/Amy_Finkelsteinepisode on youtube: https://youtu.be/nvVlNSolE3sshow notes: https://notunreasonable.com/?p=7706When is government compelled insurance a good idea? 0:02How the public option or the mandate can create two different equilibria in the market. 8:53Dental insurance isn’t really an insurance product. 13:27The subsidy is not an objective, it’s a problem. 19:18How do we choose whether to pay attention to some of these issues or not? 25:47Why do we feel compelled to act when people are suffering from chronic conditions? 29:53What are the benefits of giving people cash instead of insurance? 33:44The problem of moral hazard in insurance. 39:51The concept of affinity and intermediation. 45:28Insurance can be learned the hard way. 51:02What happens when the price of insurance gets too high in compulsory markets. 54:46Why nobody ever wants to buy insurance. 1:01:06Some of the studies that contradict what you think you know. 1:05:23Twitter: @davecwrightSurprise, It's Insurance mailing listLinkedin Social Science of Insurance Essays
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Pricing Insurance Risk With Steve Mildenhall and John Major
Nobody knew how to price volatility until now. I bet you're surprised! This isn't hyperbole, Steve Mildenhall and John Major have a deep and thorough understanding of all the relevant literatures and have been part of a loosely collaborative team of academics and actuaries working out the details of a coherent, actionable theoretical foundation for pricing insurance for their entire careers. Now that they're both retired they've delivered us the tome the actuarial profession needs. Their new book: *Pricing Insurance Risk: Theory and Practice* is an absolute masterpiece. It is theoretically sound and immensely practical. Until today no financial institution could choose a sophisticated portfolio model that wasn't hiding biases or inefficiencies that had to be 'band-aid-ed' over with coarse heuristics. Very importantly how does one calculate the margin required to service the capital base when the risks vary so much? The science of managing a portfolio of incompletely diversified, highly volatile financial instruments has gained serious ground with this book. Steve Mildenhall is head of analytics at Qualrisk, an Insurance consulting firm, formerly assistant professor of actuarial science at St. John's University, and before that CEO of analytics at Aon. This is Steve's fifth appearance on this show. John Major is principal at Major analytics and the former director of actuarial research at guy carpenter. youtube: https://youtu.be/ZQHpMVH7d9sshow notes: https://notunreasonable.com/?p=7694Steve and John did a tutorial on this material and more with some technical examples you can see here: https://www.youtube.com/@ermdiner/Here is a link to the spreadsheet used in the tutorial: https://docs.google.com/spreadsheets/d/1CV3sF52cjPH8mw6T4E-jOfCNDagCptRs4xBZTug8Z0A/edit?usp=sharingHere are some Not Unreasonable Podcast Episodes about related content:Samir Shah on Innovating Capitalhttps://www.buzzsprout.com/126848/8171216andSteve on the Macro History of insurance Part 1:https://www.buzzsprout.com/126848/8121657And Part 2https://www.buzzsprout.com/126848/8507268In the show we cover:How do you think of the cost of running the capital side of insurance?2:06The importance of connecting the value to the value of the original customers.5:18What is the value of reinsurance?7:34The timing of Hurricane Andrew relative to the early cat models.18:44The history of cat models in the 60s.21:22What the CEO’s are disagreeing about in volatility?33:04What could possibly justify 50% margins in these companies?42:59What doesn’t make sense about the intentionality argument.46:28What is the market price for risk?48:02The difference between allocating capital vs. allocating margin.1:01:39What’s the right metric for determining performance of a reinsurance company?1:08:07The further removed you get from loss, the cheaper the capital is as a percent of capital, but the more expensive the insurances are.1:22:59How long did it take for these ideas to emerge? How did they evolve?1:24:55The key to unlocking a lower cost of capital1:29:07What is the required return in a regulated environment?1:32:55The amount of leverage you get is huge.1:48:24Steve’s envelope theorem and how it works.1:53:18What’s the insight that underlies the ability to determine bounds for spectral measures?1:56:46Characterizing the worst risk-adjusted expected outcome.Twitter: @davecwrightSurprise, It's Insurance mailing listLinkedin Social Science of Insurance Essays
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Mark Friedlander on Florida's Insurance Overhaul
Mark Friedlander returns to talk through the changes to Florida's insurance laws. It's just about the most comprehensive reform anyone could imagine, even if all it does is put Florida residents on a similar footing to many other states!Assignment of Benefits Removal won’t be enforced until January 1, 2023.3:35What’s the risk of a political backlash from insurance companies?8:52The problem with the May special session was the senate was willing to take the similar steps that were just passed, but the House leadership was against it13:38What’s next for reinsurance in Florida?16:59How does the legislature pre-commit to not going “crazy” in 10 years?19:51What are the policies that go to citizens and there are some changes to citizens as well?DaveDeMott of Stories of Florida Insurancehttps://www.buzzsprout.com/126848/11840226Gary Mormino on Social History of Florida: https://www.buzzsprout.com/126848/11848870Mark Friedlander on Problems with Insurance in Florida: https://www.buzzsprout.com/126848/11582094Joe Petrelli on Rating Florida Insurance Companies: https://www.buzzsprout.com/126848/11547382youtube: https://youtu.be/8Bfkrbiazxwshow notes: https://notunreasonable.com/?p=7667Twitter: @davecwrightSurprise, It's Insurance mailing listLinkedin Social Science of Insurance Essays
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Gary Mormino on the Social History of Florida
Do you think Florida is weird? Most everyone does. Why? Gary is the man to answer this question. Gary is Professor Emeritus of the University of South Florida and has dedicated his career to studying the social history of Florida. Here is Gary on wikipedia Here is Gary on Amazon Quote of the show: "Do crazy people immigrate to Florida or do perfectly normal people come here, and then be a little goofy and go crazy."What is the most unusual social characteristic of Florida? 0:00What are some of the most distinctive features of Florida? 9:37Florida’s “Florida Man” reputation. 15:49California and Florida are neck and neck in population density growth in last 100 years. 24:51Florida is running out of options for reinsuring barrier islands. 35:55What it costs to live on the coast in Florida. 40:18How is Florida a Ponzi State? 42:28What’s the real alternative? 46:55What are the similarities and differences between Florida and other states in terms of immigration? 53:49How the Cuban vote has been a solid republican vote since 1961show notes: https://notunreasonable.com/?p=7659youtube: https://youtu.be/WT0iS-sDa54More on Florida: Dave DeMott's Stories About Florida Insurance: https://www.buzzsprout.com/126848/episodes/11840226 Mark Friedlander on Problems with Insurance in Florida: https://www.buzzsprout.com/126848/episodes/11582094Joe Petrelli on Rating Florida Insurance Companies: https://www.buzzsprout.com/126848/episodes/11547382Twitter: @davecwrightSurprise, It's Insurance mailing listLinkedin Social Science of Insurance Essays
Hosted by David Wright, a former actuary and reinsurance broker, now a technology executive. Not Unreasonable brings you interviews covering management, analytics, sales and economics interpreted through David's insurance and reinsurance background. Subscribe in iTunes, stitcher, or by rss feed. Sign up for my newsletter here and also see us on youtube!Show notes at notunreasonable.com
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