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
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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
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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
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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
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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
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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
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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