Broker Profitability: Tony Cornell’s take on the industry :: Insurance Age


So, Tony Cornell’s macro perspective mirrors my own conclusions and contradicts the sentiments expressed in the recent PwC survey…no surprise there then! I have already declared my own opinion that a “mood of optimism” was, at best, dangerously naive.

The coming year will be a difficult one for growth. Inflation is likely to return to low levels, economic growth will be non-existent and competition will remain fierce. Margins will be under attack and cutting expenses to match a potential fall in income will be a survival strategy for most. This means, yet again, lower standards of service from insurers, hardening claims attitudes, re-organisations and staff reductions. Consolidators will need to concentrate on integration and achieving economies of scale other than through commission leverage. It will be a difficult year…

via A year to remember Insurance Age.

Tony knows the UK insurance industry better than most and has been sharing his thoughts for more years than he would (probably) admit. What Tony does not know is that unmanaged and excessive complexity is at the root of many of these issues. YET, AN INDUSTRY THAT PROFESSES TO KNOW ABOUT RISK EXPOSURE, IS “CONTENT” TO CARRY ON AS THEY HAVE DONE, DESPITE; A RADICALLY CHANGED ECONOMIC ENVIRONMENT AND; WITHOUT REALLY CONSIDERING THE EXTENT OF THE CONTRIBUTION TO THEIR OWN PLIGHT; ATTEMPTING TO TACKLE TODAY’S PROBLEMS WITH YESTERDAY’S TOOLS, OR; RECOGNISING THAT TREATING UNCERTAINTY AS IF IT WERE RISK, IN THE “DIGITAL AGE”, IS AN UNFORGIVEABLE ERROR.

Video: Business lessons from quantum theory!!!


At School I dropped science subjects in favour of the language of a fallen Empire (Rome) and Economics, so I didn’t have too much cause to think “things scientific” let alone Quantum Theory!

But, my journey into Complexity theory led me to broaden my reading (some may even call it research!) into System, Information and Chaos Theories. As well as a bit of Biology, Physics and Maths. I WOULD NEVE HAVE BELIEVED THAT IN A THOUSAND YEARS!!! Especially as the intention, when establishing Ontonix UK, was to identify how best our Quantitative Complexity Management solutions could be deployed to reduce risk, primarily, in insurance and the wider Financial sector!

The more closely I looked at subjects, that were relatively unknown to me, the greater my appreciation of those matters AND, through that, the more I understood (and questioned)  things that were already known to me.

However, apart from my new found appetite for science, what startled me most was the realisation that, much of what has become “accepted practice” in the business environment is based upon (wrong) assumptions and the attitude that “there is little that we need to learn about business and risk management”…especially from science!

Such is the culture of an industry with little doubt about its own infallibility!!!!

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Complexity: structural engineering for business survival


Trust me, even the smallest business is a complex system! And there is so much more that EVERY business can learn from the rigorous scientific environment than they will ever gain from the “soft skills” of management consultants attempting to re-engineer the conventional hierarchical structure. That parrot is deceased!!!

In modernity it is pointless denying that we aren’t all part of an infinitely complex network of systems and ecosystems. We need to get “fit for randomness”…

  1. To take the “fat tails” of power law systems seriously. Expect change to arrive not gradually, in a way that will allow the organization to adjust in real time, but in sudden discontinuities of great consequence that reshape the business environment, bringing both dangers and opportunities.
  2. To recognise that globalization and decentralization bring risks as well as rewards, and that more is sometimes different — that increased interdependence can create the conditions for “emergent” threats that are traceable to no specific element within the system.
  3. To take note of the human element in efforts to become adaptable, in part by organizing practices to decrease “entrainment of thinking.”

The Institutions that, for generations, enjoyed our trust have been exposed as untrustworthy. The model was created for the, predominantly, linear processes* of the Industrial era. Although the techniques and tools of management have certainly evolved, from what we now know about the nature of systems, our efforts may be misguided and more damaging than we could have known.

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