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September 09, 2005

About This "... In Other Words..." Weblog

In Other Words... dissects, discusses and explains Insurance issues in Plain English...to make them intelligible to "reasonable persons" who want to know more about the Industry.

Insurance (let alone Reinsurance) is "that industry...over there" to the overwhelming majority of us. Say you meet a random character in town. He tells you "I work in aerospace (or energy, or banking, or whatever)" and you have a broad idea of what goes on there, whether he's a travel agent or airline CEO (hmmm...maybe on his way to a meeting arranging D-I-P financing). However, with insurance, you really don't know (...must be actuary, or....oh oh!..."look--I don't need anymore insurance, nice to meet ya, have to run!").

Then, Insurance insiders reinforce this perception. "We don’t know our Cost of Goods Sold until AFTER we sell the product", they say. Some of the industry is highly regulated, in the US--by states. Product lines employ specialized underwriting techniques, actuaries and their own technical jargon. Further, Property & Casualty ("P&C") Insurance is bought and sold in opaque and illiquid markets. However, P&C Insurers, as a group, generate a low 6% historical average return on equity (!) which is well below the rest of industry--and which helps explain why it's "different". Whether this low return is due to low inherent risk--or questionable commercial practices--in the P&C industry remains a topical issue today.

In Other Words... will be a dialog "on insurance issues" between YOU, our visitors, and someone who has "been there, done that" (me). I'll start with a piece giving my take on a topical issue, say every 1-3 weeks or so, more or less often as events occur. In addition, I'll keep an eye on the financial media and offer comments on "newsy" developments. I'll focus on P&C Insurance, initially--since the industry remains in the spotlight of New York State Attorney General Elliott Spitzer and SEC investigations.

In Other Words... will assist "financial" visitors unfamiliar with the insurance industry. You are skilled in your line of work, be it banking, hedge fund portfolio management, corporate treasury, government regulation, commercial law, business media--but you want to cut through the jargon and fluff and discover what is going on in this arcane industry. Alternatively,.....

In Other Words... will assist "industry insiders" who need to make a compelling case, in Plain English, for their business model to outsiders, be they prospective investors, lenders, regulators--or other "reasonable persons".

In Other Words... Throughout all this, I want and need your views--but you'll have to be a PRMIA member to comment.

Perhaps together, we can make sense of this "opaque and illiquid" market?

Posted by at September 9, 2005 11:10 AM