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The Not Unreasonable Podcast

Author: David Wright

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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.

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93 Episodes
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: @davecwrightSurprise, It's Insurance mailing listLinkedin 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 on wikipedia on youtube: notes: 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
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: notes: and John did a tutorial on this material and more with some technical examples you can see here: is a link to the spreadsheet used in the tutorial: are some Not Unreasonable Podcast Episodes about related content:Samir Shah on Innovating Capital on the Macro History of insurance Part 1: Part 2 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
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 Insurance Mormino on Social History of Florida: Friedlander on Problems with Insurance in Florida: Petrelli on Rating Florida Insurance Companies: notes: @davecwrightSurprise, It's Insurance mailing listLinkedin 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? 0:00What 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: on Florida: Dave DeMott's Stories About Florida Insurance: Mark Friedlander on Problems with Insurance in Florida: Petrelli on Rating Florida Insurance Companies: @davecwrightSurprise, It's Insurance mailing listLinkedin 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. 0:00What is a lodestar fee multiplier? 5:23The problem with AOB 12:29What work is being done to curb predatory behavior by carriers? 19:03Water damage and leaky roofs  23:15What’s the distinct about Florida? 29:28Lobbyists have their golden notes: on Florida: Mark Friedlander on the Florida Insurance legislation of Dec 2022 Mormino on Social History of Florida: Friedlander on Problems with Insurance in Florida: Petrelli on Rating Florida Insurance Companies: @davecwrightSurprise, It's Insurance mailing listLinkedin 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: notes: @davecwrightSurprise, It's Insurance mailing listLinkedin 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: notes: on Florida: Gary Mormino on Social History of Florida: DeMott's Stories About Florida Insurance: Joe Petrelli on Rating Florida Insurance Companies: @davecwrightSurprise, It's Insurance mailing listLinkedin 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: notes: on Florida:Gary Mormino on Social History of Florida: DeMott's Stories About Florida Insurance: Mark Friedlander on Problems with Insurance in Florida: @davecwrightSurprise, It's Insurance mailing listLinkedin 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 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: @davecwrightSurprise, It's Insurance mailing listLinkedin 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 Patersonshow notes: @davecwrightSurprise, It's Insurance mailing listLinkedin 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: notes: @davecwrightSurprise, It's Insurance mailing listLinkedin Social Science of Insurance Essays
Tyler Cowen on Talent

Tyler Cowen on Talent


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 (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: notes: link: @davecwrightSurprise, It's Insurance mailing listLinkedin 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: link: @davecwrightSurprise, It's Insurance mailing listLinkedin 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: link: @davecwrightSurprise, It's Insurance mailing listLinkedin 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: @davecwrightSurprise, It's Insurance mailing listLinkedin Social Science of Insurance Essays
Ga Bartick on How To Sell

Ga Bartick on How To Sell


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: @davecwrightSurprise, It's Insurance mailing listLinkedin 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 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: @davecwrightSurprise, It's Insurance mailing listLinkedin 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: @davecwrightSurprise, It's Insurance mailing listLinkedin Social Science of Insurance Essays
Craig Hupper on ESG

Craig Hupper on ESG


Craig is Head of ESG for Trans Re, a global reinsurance company and in this episode we dig into what ESG is about generally and what role reinsurers and the insurance industry plays today. In the episode we cover:* Is Trans doing this for the good of society or just to raise rates?* Is it just about catastrophe business?* Does it just mean you'll make more money on non-ESG-consistent risks?* What does a company that embodies the antithesis of ESG values look like?* Is this just a marketing strategy?* Is a marketing strategy actually a really good reason to do this, even in principle?* Does it make sense to have a separate ESG committee?* What on earth is the G about?And much more!Twitter: @davecwrightSurprise, It's Insurance mailing listLinkedin Social Science of Insurance Essays
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