Insurance, risk & underwriting:: out of the coffee shop and into the light


Underwriting next level Wow! This is a great report from a US firm called Strategy Meets Action and I think that Deb Smallwood has spelled-out a way forward for insurers, MGA’s and brokers who are dithering on what they need to do be “win” in the immediate future and in the longer term, no matter how the landscape changes in coming years.

Don’t get me wrong, whilst the report makes sense of so much that can (does) cloud the mind of insurance executives – who have so many strategic issues to address and an abiding fear of making the wrong call – it doesn’t enlighten them as to “how” they tackle some fundamental failings, such as:

  • how to differentiate between risks that “look good”, according to correlations in data gathered over many years and those that ARE good, based upon a reliable measurement of their current resilience [ability to absorb unforeseen events]
  • how to rate risks for which there is little or no historic data [the truly “new” venture]
  • how to develop and maintain a sensory awareness of, rapidly changing, internal/external factors – threats and opportunities

Real-time visibility is, undoubtedly, a huge advantage in the Digital Age but, that does pre-suppose that the capability to analyse large scale data [Big Data is THE hot topic] exists. But an even more important question is…

…how do you recognise something you haven’t seen before?

That is to say if it is a familiar pattern i.e. risk, something “known”. But hold on a minute, if this is the full extent of what the smart, enabled and aligned, insurer is looking for then that is to fail to recognise that there are “unknowns”. Do we assume that something unfamiliar is irrelevant, an outlier, or investigate to ensure it is not a new, emergent, pattern or risk?

Institutional abuses:: “cut the crap” – from edifice to artifice


So what if, Barclays and others* have been caught screwing the system…AGAIN!

*”Other big names believed to be under investigation include Citigroup, JP Morgan, Deutsche Bank, HSBC and Royal Bank of Scotland”

Cue outcry, righteous indignation, questions in the House and sound bites from every direction. This passes as information but isn’t it just a smokescreen!? Never mind “white collar” crime this is YET ANOTHER case of bare-faced THEFT. £290m is a helluva lot of money to you and me but it will not amount to the collective remunerations to Directors of Barclays (or any other bank) over the last 10 years!!!

What happened to Corporate Governance? Too big to fail was just code for “way too close and too complex to prosecute” without being recognised as accomplices and suffering the, unthinkable but inevitable, loss of office…the jails are too overcrowded anyway!

What is “the system” that they have been abusing?

According to Wikipedia “The phrase in this usage can carry negative connotations”. Damn right it does…PLEASE think about the question. What is it? Why is it? Who pays for it? How can it be changed? But don’t just think about “it” in terms of the banking or financial system, because the culture has contaminated and corrupted Institutions that were once pillars for all that was good in our society.

American capitalism is predatory, and American politics are corrupt: The same thing is true in England and the same in France; but in all these three countries the dominating fact is that whatever the people get ready to change the government, they can change it

Upton Sinclair (1918)