Yes, it’s the obligatory end of the year post! Frankly, you could just read the “Best Of” page instead, but if you want a somewhat longer version, here you go…
I’ve grouped together the various themes that tended to repeat over the year and many of which you can expect to hear about again at various times in 2020.
If there is one commonality, my goal is to help you avoid falling into pitfalls, whether they be raising awareness of risks or exposing misleading practices.
I guess you can consider me not the insurance superhero you need, but perhaps the one you deserve (as if anyone is asking for an insurance superhero!).
“Protecting You From Insurance Baddies”
Underappreciated Risks
Probably the drum I’ve beat on the most is emerging casualty losses, including the Ian’s Alert series. Honestly, there have been enough events that have come to my attention that I could probably write a weekly Alert column.
I also explored underrated cat risks like Seattle quake and I have a couple ideas in mind for risks that are probably aren’t on many people’s radar yet to write about in the New Year. There are certainly market risks that tend to be overlooked as well which I will try to write about more often going forward.
Throwing Shade at Insuretech
I think there is a little bit of misunderstanding here. I’m not against improving insurance with better technology or even creating new business models. I’m actually all for it. I’m against anointing every run of the mill startup as something revolutionary that we should all look up to.
So, yes, when I see insanely overvalued and overhyped startups, I’m going to try to bring them down a peg or two. At the same time, if I come across someone who I think is really creating something novel, I will be sure to highlight that as well.
The Three Rules of Reserve Disclosure
If there is ever a test about this blog, you can be sure you will be asked to recall the three following rules:
- Companies know more than investors.
- Companies only raise price in response to bad news (known or pending).
- Nobody wants to admit to bad news first!
These rules will be more important than ever in 2020!
Fact Checking with Math
Whether it be Stephen Catlin making up dramatic reserve shortfall headlines, showing why insuretech valuations are unsustainable, or reminding observers of the leverage of earnings to changes in combined ratios, I’m always glad to de-bunk ridiculous claims with some numbers.
The Need For Change in Personal Lines
From overstored captive agencies to antiquated homeowners underwriting, the personal lines industry needs to make some major changes. Allstate’s recent decision to consolidate its efforts under the Allstate brand (something I’ve been advocating since the Esurance acquisition) will be something to pay close attention to in the coming year.
Correcting Flimsy Narratives
I’ve certainly spent a lot of time on the contradictions within ESG. As with my insuretech skepticism, this doesn’t mean it’s all bad.
However, when a narrative gets stretched to the point where it distorts efficient decision making and borders on misleading, that’s when I’ll get on my soapbox. This motive also led to the piece refuting the GE shortseller.
Predictions!
From sports to markets to politics, I made a number of predictions over the year. The hit rate was pretty high, particularly the call to pick Virginia to win the NCAA title and that Bloomberg would enter the Presidential race.
Since the NFL playoffs kick off this weekend, I’ll throw in a quick bonus prediction. The best predictors of playoff success are having a bye, having a big gap in point differential over the season (i.e. points scored – points allowed) rather than the best W-L record, and record vs. winning teams.
This says don’t be fooled by the Texans or Seahawks and you can trust the Niners. We will likely get a Ravens-Niners Super Bowl, but in order to go a little off consensus, I’m going to say the Chiefs have the firepower to beat Baltimore in a shootout. Thus, we will have a Chiefs-Niners Super Bowl with Kansas City emerging victorious.
Fun Stuff
Because some people find insurance boring, I mixed in some fun stories that had an analytical side to them like Mattress Mack, pizza insurance, and the wildebeest theory of the insurance cycle.
Happy New Year!
Thanks for reading in 2019 and I’ll endeavor to make it worthwhile to stick around in 2020.