The Not Unreasonable Podcast

David Wright

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. Subscribe in iTunes, stitcher, or by rss feed. Sign up for my newsletter here and also see us on youtube!Show notes at notunreasonable.com

  1. 01/31/2023

    Death Spirals and Other Selection Problems with Amy Finkelstein

    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

    1h 12m
  2. 01/08/2023

    Pricing Insurance Risk With Steve Mildenhall and John Major

    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

    2h 28m
  3. Gary Mormino on the Social History of Florida

    12/15/2022

    Gary Mormino on the Social History of Florida

    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

    1h 9m
4.8
out of 5
24 Ratings

About

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. Subscribe in iTunes, stitcher, or by rss feed. Sign up for my newsletter here and also see us on youtube!Show notes at notunreasonable.com