I had a socialist professor for some business class or another as an undergraduate. Like most of my undergraduate courses, it was a fairly expensive waste of money, especially given that he was a socialist, but he said one thing of value that has stuck with me because he was 100% correct: Bankers will always need bailouts The Federal Government will always be bailing out banks because bankers cannot accept that banking is boring and generates a relatively low ROI in a safe en

A while ago, I heard an executive at the IIABA declare that Progressive would soon be losing money because they were spending so much on advertising. I’ll be blunt: this is an ignorant statement. It does not matter if a carrier spends $1 million or $5 billion on advertising. The nominal amount is completely immaterial. What matters is the return on investment for those dollars. If the return on investment is 18% for $5 billion but only 12% for $1 billion, spend the $5 billion

I read an article in Carrier Management (Dec 18, 2025) about how insurance companies are pairing AI and process engineering to drive subrogation outcomes. The immediate thought that came to mind is that carriers are not culturally or intellectually ready to do this. Most insurance companies and agencies are horrible strategic planners. Sure, they go through the motions, and many pay hundreds of thousands to consultants to build strategic plans. What is missing besides a lot?

A recent, very well-written article with great points, “Why Prevention is the New Protection,” by Daniel Grimwood-Bird, prompted me to write this article. His points are dead-on accurate about how a majority of auto accidents are almost 100% preventable with the right risk management tools. ​Excluding catastrophe losses, almost 100% of property claims are also preventable. Even catastrophe claims can largely be mitigated, minimized, or eliminated. And yet carrier pricing give

Have you ever seen a suspense movie with unexpected twists of who is on whose side? Or a spy movie where two enemy states find some reason to work together to destroy some other third party? Well, that is sort of what happens between plaintiff firms and insurance companies. On the surface, they spend a ton of money convincing the public and courts that they are mortal enemies. However, both achieve greater success when plaintiff firms prevail, provided the wins are not so sig

It seems everyone in the insurance industry is aware of the California regulatory fiasco. If ever there was an insurance regulatory scenario akin to Nero fiddling while Rome burned, this is it. And it has been going on for decades. I strongly recommend everyone read “These are the Plunderers,” by Gretchen Morgenson. This book has a California focus beginning in 1992 and ending in 2025. If you feel your stomach turning while reading this book, you will not be alone. The regula

I was listening to the Michael Lewis podcast, “Against the Rules.” The season involved what I consider to be the highly unethical methods designed to attract people bad at evaluating odds to gamble on sports and then gamble more. I highly recommend the podcast and his books. Hearing the old-fashioned bookies was one of the best parts of the podcast. One of them used terms identical to insurance terms. If you have a good underwriting model for judging risk and odds, you want t

Why can’t carriers generate quality loss runs and underwrite appropriately using those loss runs? I know, I know, they’re just waiting on AI to do all this for them. If that is the case, I strongly recommend all underwriters immediately begin looking for new jobs because your employer is not going to give you AI as an underwriting tool. They’re going to replace you even if they shouldn’t. However, AI cannot work effectively with incomplete and inaccurate data. I was reviewing

I read the Wall Street Journal daily, and one of my favorite wealth writers, Jonathan Clements, recently passed away. Another columnist, Jason Zweig, wrote two articles about his passing. One included several insightful passages Clements had written regarding human psychology and investing. One that hit home, from April 8, 2007, was, “Think you’re immune to confirmation bias? If you are a regular reader of this column, ask yourself this question: Why do you keep reading my ar

Carriers have a growth problem, and they only have one likely solution to generate organic growth. A recent research paper, “Valuation and Long-Term Growth Expectations,” by Angel Tengulov of the University of Kansas, Josef Zechner of the Vienna University of Economics and Business, and Jeffrey Zweibel of Stanford University, identified key variables in determining long-term growth. In other words, what factors best predict long-term growth? A factor that improves long-term g

Historically, the P&C market rode a seven-year wave, give or take. The market would be soft for around seven years, hard for around two to three years, and repeat. During the soft market phase, the carriers who had plenty of surplus and were unwilling to compete on price wrote the accounts that came their way and waited for the hard market. When the hard market arrived, they had the surplus, the capacity, to write everything at their price. They would grow significantly and p

A California State Court ruled that the California FAIR Plan’s homeowners form is unlawful and fails to meet minimum coverage requirements. How long has the form been in place? One year? Two years? Decades? And the California DOI never raised any questions? The California FAIR Plan, with an evidently inadequate policy, meaning their coverages and therefore their claims are less than normal, or were until this ruling, still effectively went broke after the fires. (My definitio

I saw an item on the news recently regarding medical malpractice rates being approximately 4 times higher than normal, too few doctors as a result, and so on. The story covered the entire litany of bad things that happen when the litigation environment is too favorable for plaintiff attorneys. The reporter then interviewed a plaintiff attorney who made all the same comments plaintiff attorneys always make. “Insurance companies make billions.” “Consumers will be harmed if caps

The insurance industry suffers from a long legal history and a dictionary's worth of terms. This combination is toxic because the industry is scared to improve wording for fear that new wording will not comply with historical case law. The net result is we continue to build a Tower of Babel, more and more words used synonymously that are not synonymous, and terms that are oxymoronic to people outside the industry. For example, how many different kinds of brokers are there, an

Homeowners insurance is a disaster created by many parties, none of whom work together, but whose teamwork is required to fix the issues. The industry has created an insurance product that is not affordable for many consumers. Furthermore, study after study shows a large proportion of homeowners are materially underinsured. What’s the value to a consumer of buying an inadequate policy at a price they cannot afford? On the other side of the equation, carriers are selling an in

I doubt there has ever been a time when more people are pushing, developing, or considering the creation of state-backed FAIR plans. Somehow, in some way, through magic finance, these people are pushing the narrative that they can provide affordable insurance because they don’t have to make a profit, unlike those “greedy” insurance companies. This is not good for the public, who will fund these programs and the resulting losses. Insurance companies are, on average, excluding

I read about a lawsuit alleging 25 carriers conspired in California to withdraw from wildfire prone locations simultaneously. I haven’t read this lawsuit, only some articles regarding it, so what follows may be total folly. If so, have some fun with it. My first reaction in reading these articles is that here we go again, more nut jobs suing insurance companies for likely unfounded reasons. A segment of our country appears to think prosperity is built through lawsuits. But th

A recent headline read, “How AI is Redefining Insurance Pricing Strategies,” followed by, “AI in pricing represents a breakthrough, with some insurers already shifting to automated solutions that promise more accurate risk assessment and increased profitability.” If someone is working in an Ivory Tower and not in the real world, AI probably is the solution. Otherwise, this statement and concept fail in light of two realities. The first is simply summed up by the old truism ab

In the March 28, 2025 edition of Carrier Management, the synopsis of a study by the Insurance Research Council stated that 33.4% of drivers were either uninsured or underinsured. A 2022 survey by the American Property Casualty Insurance Association identified that the majority of homeowners have not even considered increasing their values, given building inflation. Another 2022 study by Cape Analytics identified that approximately 67% of homes are underinsured by an average o

It is not rocket science. I read an article about a new MGA using “dynamic” modeling software to identify wildfire exposure and proactively make recommendations to mitigate damage potential. That sounds awesome. It’s also an unnecessary expense. Everyone is so wrapped up in technology that they have forgotten how simple property underwriting really is. I recently wrote an article stating carriers are lazy, and they are. A reader was upset I said this, and went on to say how g