The Not Unreasonable Podcast

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 lessons Dana 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/6XLjsp67UFE Twitter: @davecwright Surprise, It's Insurance mailing list Linkedin Social Science of Insurance Essays

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 book https://www.amazon.com/Risky-Business-Insurance-Markets-About/dp/0300253435/ Amy on wikipedia https://en.wikipedia.org/wiki/Amy_Finkelstein episode on youtube: https://youtu.be/nvVlNSolE3s show notes: https://notunreasonable.com/?p=7706 When is government compelled insurance a good idea? 0:02 How the public option or the mandate can create two different equilibria in the market. 8:53 Dental insurance isn’t really an insurance product. 13:27 The subsidy is not an objective, it’s a problem. 19:18 How do we choose whether to pay attention to some of these issues or not? 25:47 Why do we feel compelled to act when people are suffering from chronic conditions? 29:53 What are the benefits of giving people cash instead of insurance? 33:44 The problem of moral hazard in insurance. 39:51 The concept of affinity and intermediation. 45:28 Insurance can be learned the hard way. 51:02 What happens when the price of insurance gets too high in compulsory markets. 54:46 Why nobody ever wants to buy insurance. 1:01:06 Some of the studies that contradict what you think you know. 1:05:23 Twitter: @davecwright Surprise, It's Insurance mailing list Linkedin Social Science of Insurance Essays

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/ZQHpMVH7d9s show notes: https://notunreasonable.com/?p=7694 Steve 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=sharing Here are some Not Unreasonable Podcast Episodes about related content: Samir Shah on Innovating Capital https://www.buzzsprout.com/126848/8171216 and Steve on the Macro History of insurance Part 1: https://www.buzzsprout.com/126848/8121657 And Part 2 https://www.buzzsprout.com/126848/8507268 In the show we cover: How do you think of the cost of running the capital side of insurance? 2:06 The importance of connecting the value to the value of the original customers. 5:18 What is the value of reinsurance? 7:34 The timing of Hurricane Andrew relative to the early cat models. 18:44 The history of cat models in the 60s. 21:22 What the CEO’s are disagreeing about in volatility? 33:04 What could possibly justify 50% margins in these companies? 42:59 What doesn’t make sense about the intentionality argument. 46:28 What is the market price for risk? 48:02 The difference between allocating capital vs. allocating margin. 1:01:39 What’s the right metric for determining performance of a reinsurance company? 1:08:07 The further removed you get from loss, the cheaper the capital is as a percent of capital, but the more expensive the insurances are. 1:22:59 How long did it take for these ideas to emerge? How did they evolve? 1:24:55 The key to unlocking a lower cost of capital 1:29:07 What is the required return in a regulated environment? 1:32:55 The amount of leverage you get is huge. 1:48:24 Steve’s envelope theorem and how it works. 1:53:18 What’s the insight that underlies the ability to determine bounds for spectral measures? 1:56:46 Characterizing the worst risk-adjusted expected outcome. Twitter: @davecwright Surprise, It's Insurance mailing list Linkedin Social Science of Insurance Essays

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. 3:35 What’s the risk of a political backlash from insurance companies? 8:52 The 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 it 13:38 What’s next for reinsurance in Florida? 16:59 How does the legislature pre-commit to not going “crazy” in 10 years? 19:51 What are the policies that go to citizens and there are some changes to citizens as well? DaveDeMott of Stories of Florida Insurance https://www.buzzsprout.com/126848/11840226 Gary Mormino on Social History of Florida: https://www.buzzsprout.com/126848/11848870 Mark Friedlander on Problems with Insurance in Florida: https://www.buzzsprout.com/126848/11582094 Joe Petrelli on Rating Florida Insurance Companies: https://www.buzzsprout.com/126848/11547382 youtube: https://youtu.be/8Bfkrbiazxw show notes: https://notunreasonable.com/?p=7667 Twitter: @davecwright Surprise, It's Insurance mailing list Linkedin Social Science of Insurance Essays

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? 0:00 What are some of the most distinctive features of Florida? 9:37 Florida’s “Florida Man” reputation. 15:49 California and Florida are neck and neck in population density growth in last 100 years. 24:51 Florida is running out of options for reinsuring barrier islands. 35:55 What it costs to live on the coast in Florida. 40:18 How is Florida a Ponzi State? 42:28 What’s the real alternative? 46:55 What are the similarities and differences between Florida and other states in terms of immigration? 53:49 How the Cuban vote has been a solid republican vote since 1961 show notes: https://notunreasonable.com/?p=7659 youtube: https://youtu.be/WT0iS-sDa54 More 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/11582094 Joe Petrelli on Rating Florida Insurance Companies: https://www.buzzsprout.com/126848/episodes/11547382 Twitter: @davecwright Surprise, It's Insurance mailing list Linkedin Social Science of Insurance Essays

Dave DeMott is President-Elect of The Florida Surplus Lines Association, Chair of the Legislative committee and sits on the national Wholesale & Specialty Insurance Association committee. Most importantly for today, Dave DeMott is a real, legit, on-the-ground insurance practitioner in Florida. He gets into the real details and war stories about insurance claims in Florida. Dave’s introduction to the Florida insurance market. 0:00 What is a lodestar fee multiplier? 5:23 The problem with AOB 12:29 What work is being done to curb predatory behavior by carriers? 19:03 Water damage and leaky roofs 23:15 What’s the distinct about Florida? 29:28 Lobbyists have their golden opportunity. youtube: https://youtu.be/G7iGuLLZNwk show notes: https://notunreasonable.com/?p=7654 More on Florida: Mark Friedlander on the Florida Insurance legislation of Dec 2022 https://www.buzzsprout.com/126848/11907447 Gary Mormino on Social History of Florida: https://www.buzzsprout.com/126848/11848870 Mark Friedlander on Problems with Insurance in Florida: https://www.buzzsprout.com/126848/11582094 Joe Petrelli on Rating Florida Insurance Companies: https://www.buzzsprout.com/126848/11547382 Twitter: @davecwright Surprise, It's Insurance mailing list Linkedin Social Science of Insurance Essays

I worry about whether we can improve the insurance system. I once wrote an essay arguing that all insurance is compelled, so the only way to get someone to buy insurance is to force them to do it. The implication is that nobody will ever do anything good without being forced. We learn some lessons the hard way but then quickly forget. What's more we hate this compulsion! We chafe at the rules and many of us shirk them when we can. It's a mess. Joe Edelman has a better vision. In his vision (in my words), we have values that give us a sense of meaning. Connecting with other people who share these values is (should be) our social objective. Groups anchored around values will develop norms for deepening the pursuit of these values, norms we'd gladly accept because the values are so meaningful to us. Norms are another way of saying "social rules we live by" and the minute you are putting rules down you are constraining some actions and, even if only by negation, compelling others. If we can create a system where rules are embraced rather than resented, we can create a vastly superior society than we have today. Listen for our discussion of this! Joe's homepage: https://nxhx.org/ youtube: https://youtu.be/Sjennrn5LNA show notes: https://notunreasonable.com/2022/10/28/joe-edelman-on-designing-meaningful-things Twitter: @davecwright Surprise, It's Insurance mailing list Linkedin Social Science of Insurance Essays

Mark Friendlander is Director of Corporate Communications at the Insurance Information Institute a think tank focusing on insurance education. In this episode we dig into a bunch of detail of the ways in which the insurance ecosystem in Florida is doing Floridians harm and why the world is like that. What are the root causes of the fraud in Florida? What are the outcome? What happens if nothing changes? What are some special powers you have as an insured in Florida and how are they ultimately harmful? youtube: https://youtu.be/g63n9Kgq4CY show notes: https://notunreasonable.com/?p=7641 More on Florida: Gary Mormino on Social History of Florida: https://www.buzzsprout.com/126848/episodes/11848870 Dave DeMott's Stories About Florida Insurance: https://www.buzzsprout.com/126848/episodes/11840226 Joe Petrelli on Rating Florida Insurance Companies: https://www.buzzsprout.com/126848/episodes/11547382 Twitter: @davecwright Surprise, It's Insurance mailing list Linkedin Social Science of Insurance Essays

Joe Petrelli founded Demotech, the rating agency that dominates the solvency assessment market for Florida's homeowners insurance market. This year (2022) he has found himself the bearer of bad news: that many of Florida's domestic insurance companies have not met Demotech's standards. At least six insurance companies went insolvent this year with others being downgraded, which meant that many thousands of Florida residents have to scramble to get their insurance replaced. I should note that all of this happened before Hurricane Ian, the costliest hurricane to make landfall in Florida's long history of landfalling hurricanes. What's going on in Florida? Joe is here to talk about it! youtube: https://youtu.be/Cd9JpHsjDr8 show notes: https://notunreasonable.com/?p=7636 More on Florida: Gary Mormino on Social History of Florida: https://www.buzzsprout.com/126848/episodes/11848870 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/11582094 Twitter: @davecwright Surprise, It's Insurance mailing list Linkedin Social Science of Insurance Essays

Brian Nosek, has been at the center of the two most important recent social revolutions in academia. First is implicit bias where Brian co-founded Project Implicit http://projectimplicit.net/ based on a pretty incredible idea: that we don't do what we say we value. The concept of implict bias has really taken off and the practice of implicit bias detection and training has gone "way out in front of the research" as we discuss. While he was busy kicking off a fundamental change in our society (felt very strongly in academia) he decided to upend (and massively upgrade) the culture of research itself by discovering that huge swaths of empirical research fails to replicate. I'm no academic but I would find this terrifying if I was. As Brian says in the interview: "in some fields, people still don't like it an email from me" because that means he's about to try to replicate their work! How was Brian able to pull all this off? There's even a technology innovation hidden in all this that makes his work possible. He's a true innovator and an honor to have him on the show! show notes: https://notunreasonable.com/?p=7611 youtube: https://youtu.be/NkKuF--5V60 Twitter: @davecwright Surprise, It's Insurance mailing list Linkedin Social Science of Insurance Essays

This conversation gave me such a feeling of humility yet hope about our world. It's an awful place sometimes but some people are truly awesome at making it better. Jen Brady is the Executive Director of Oasis, a non-profit serving women and children in Paterson, NJ and this is her second appearance on the show. In the first show we talked about COVID and the poor. This time we're digging right onto Oasis and its mission and how it's doing. Charity is incredibly similar to insurance. As I half joked once in comparing them: "One of them supplies resources to those in desperate need and hopefully enables them to pull themselves out of their difficult circumstances to lead a successful life. So does the other one." Insurers could do well to learn from Jen. And she has a remarkable track record, doubling the size of Oasis during her tenure and initiating many fascinating experiments and new initiatives in Paterson, NJ. We discuss: * How self-belief is the most important factor in women lifting themselves out of poverty * How that feeling of self-belief is constructed, influenced and nurtured in and out of Oasis * The difference between generational poverty and immigrant poverty * What is the drop out rate (I was astonished) and how do they manage drop-outs * Do the problems feel endless? * What did they learn by extending Oasis into housing development? * How to not create bureaucracy in solving problems * How they handle the cultural complexity of women and children from 26 different countries (plus Paterson natives!) * How the social consequences of COVID (lockdowns, etc) impacted poor families * How much talent there is hidden in places like Paterson show notes: https://notunreasonable.com/?p=7567 youtube: https://youtu.be/aWS7tSIe68Q Twitter: @davecwright Surprise, It's Insurance mailing list Linkedin Social Science of Insurance Essays

Chris Blattman is an economist and political scientist and author of several books, most recently *Why We Fight: The Roots of War and the Paths to Peace*. This is another installment in my investigation for how to pursue social change. What I notice about insurance is that the institution is so deeply encoded in our society that we don't even realize how important it is. So deeply encoded that we actually kind of hate it, yet it persists because of how important it is. What are other ways of pursuing beneficial social change? Persistent beneficial social change? Violent conflict is a pretty big, nasty problem. But what are its roots and what are its causes? What might need to change about our world to reduce it? What is the relationship between peripheral and central societies and how is that related to violence? All that plus tons on James C Scott and more! youtube: https://youtu.be/H-bcj1LJy80 show notes: https://notunreasonable.com?p=7498 Twitter: @davecwright Surprise, It's Insurance mailing list Linkedin Social Science of Insurance Essays

Tyler Cowen is an economist, author, podcaster, venture and philanthropic sponsor. Tyler is one of my intellectual heroes, this is his third appearance on this program and we'll be anchoring this discussion around his new book *Talent: How to Identify Energizers, Creatives, and Winners Around the World* co-authored with Daniel Gross. Tyler blogs at marginalrevolution.com (I've been reading it every day for about 15 years) and hosts the only must-listen podcast in my player: Conversations with Tyler. Tyler is an inspiration! In the show we talk about: * Why the book deserves to succeed in a moral sense * Is Tyler moving away from academia? * What do I think the main connection is between Tyler and Daniel and how it informs this book? * What is the goal of writing this book? * What is the most important academic result... (ironic, I say!) * Why should Tyler's podcast guests be scared? * Is bias good or bad? * The list of tools available to those in power law businesses has grown! Book link: https://www.amazon.com/Talent-Identify-Energizers-Creatives-Winners/dp/1250275814 show notes: https://notunreasonable.com/?p=7478 youtube link: https://youtu.be/mr2jrM0fkt0 Twitter: @davecwright Surprise, It's Insurance mailing list Linkedin Social Science of Insurance Essays

Howard Kunreuther is the foremost authority on applying behavioral economics to unlikely, high consequence events. I remain astounded that Howard's teachings are not part of the educational canon for all insurance professionals. This is important stuff! In this episode we discuss: * Cognitive bias and how it impacts society generally and insurance in particular * How we might overcome cognitive bias in our decision making * Prioritization of risk * How politics really is the mediating force for discussing risk * Does voter irrationality give us cause for hope? show notes at: http://notunreasonable.com/?p=7470 youtube link: https://youtu.be/wxSsddUAIFU Twitter: @davecwright Surprise, It's Insurance mailing list Linkedin Social Science of Insurance Essays

Social science is brutally hard to do well. I once got a guest to admit there has been no progress on it ever and another one to say that moral progress is literally impossible. I think there's a deeper link to morality and social science than most so this is depressing stuff for me. This episode was part of an effort of mine to get back to first principles. But, uh.. what ARE the first principles of social science? Enter Robin! Robin Hanson is Associate professor of Economics at George Mason University and is back for his second appearance to talk about social science of very distant (in every possible sense of the term) societies. We have aliens, we have future humans, we have simulations. Robin speculates about things he can see today, things he thinks might happen in a century or two and even what might be going on in 1 million CE and perhaps beyond. As a frame for the show I think of it as trying to reason about what is permanent about social life by thinking of things that are weird and distant. Robin immediately disagrees with my premise and we go from there. We always learn from Robin Hanson, people! Show notes: https://notunreasonable.com/?p=7460 Youtube link: https://youtu.be/oYCEo3LnGFE Twitter: @davecwright Surprise, It's Insurance mailing list Linkedin Social Science of Insurance Essays

Stan McChrystal retired as a 4 Star General in the US Army and has since founded the McChrystal Group, written four books and launched a podcast. Stan is one of the world's foremost scholars and practitioners of leadership and in this conversation we focus on his latest book, Risk: A User's Guide. As I say in the interview, I think this is Stan's most straightforward how-to guide on leadership and we dig very deeply into the nuanced and fascinating connection between leadership and uncertainty, including: * What the history of military tactics can teach us about social progress * How hard is it to manage Special Forces? Why might it be different than other branches of the military? * When and why is Stan skeptical of using data to make decisions? * How does uncertainty reduction help you judge a leader? * How do we use morality to help guide us through uncertainty? Who are the best at this in the military? * What kind of information is toxic to decision making? And more! Show notes at: https://notunreasonable.com/2022/01/26/stan-mcchrystal-on-risk-and-leadership/ Twitter: @davecwright Surprise, It's Insurance mailing list Linkedin Social Science of Insurance Essays

Keith Dudum produced millions of new commission last year and is on track to doing even more this year. He's a legend and never asks for business. So how does he do it? Dudum Financial: https://www.dudumfinancial.com/

GA Bartick teaches people how to sell an underappreciated skill with very general applications. GA wrote a book called Silver Bullet Selling and in this conversation we talk about - how small organizations should scale their founders - Has sales changed over time - What is different about your industry? - How to make an emotional connection - How insurance is different! - Big ticket vs small ticket sales - Sales books are exemplary training manuals. How to teach, how to train? - Is sales training generating results? How do we know? - Do we hate practicing sales more than anything else? - Does sales training change your life? Show notes at: https://notunreasonable.com/?p=7336 Twitter: @davecwright Surprise, It's Insurance mailing list Linkedin Social Science of Insurance Essays

Scott Sumner is the Ralph G. Hawtrey Chair of Monetary Policy at the Mercatus Center at George Mason University and blogger at themoneyillusion.com and econlog and author of two books: The Midas Paradox and more recently, The Money Illusion. Scott came to prominence because his work on the Great Depression (published in Midas Paradox) gave him analytical superpowers for understanding the Great Recession in real time in 2008 and 2009 and beyond and in retrospect. We've seen the monetary policy establishment move closer and closer to the views Scott has been trying to talk them into for over ten years. Scott is one of those people who understands some very deep things about a very challenging subject. We can all learn from Scott! In the conversation we cover: - How might he design crypto monetary policy? - What matters more, revenue or wages? - Where does monetary policy end and fiscal policy begin? - Why isn't the fed more politicized? - How does Monetary Policy really work? How are inflation expectations set and how do they really matter? - NGDP targeting and how Scott's view has changed on it Show notes: https://notunreasonable.com/2021/11/26/scott-sumner-on-monetary-policy/ Twitter: @davecwright Surprise, It's Insurance mailing list Linkedin Social Science of Insurance Essays

David Zuby is executive vice president and chief research officer for the Insurance Institute for Highway Safety and also a worldwide expert on crash test dummies! I found myself in an amazingly interesting conversation with David out in the field and pulled out my smartphone to capture it! In this quick chat we discuss: * the production economy of crash test dummies * what the challenges are in designing them * what are the limitations? * how long do they last? * Do you remember Vince and Larry!? Show Notes: https://notunreasonable.com/2021/11/26/david-zuby-on-crash-test-dummies/ Twitter: @davecwright Surprise, It's Insurance mailing list Linkedin Social Science of Insurance Essays