A view from the trenches: Stunning disconnect at the National Underwriter

Let them eat cake

-Marie Antoinette, who supposedly uttered the phrase during one of the famines that occurred in France during the reign of her husband Louis XVI.

Human nature never changes, only the people change, the pockets change, the suckers and the manipulators change, the wars change, the disasters change, the technology changes – but the market never changes. How can it? People never change and peope drive the market, not reason, not economics and certainly not logic. It is human emotions that drive the market, as they do most other things on this planet.

-Richard Smitten, The Amazing Life of Jesse Livermore World’s Greatest Stock Trader

Emotions must be understood and harnessed before successful speculation is possible:

  • Greed – is a human emotion in all people, defined by Webster’s dictionary as: the excessive desire for acquiring and possessing. A desire for more than one needs or deserves. We do not know the orgins of greed, all we know is that it exists in every person.
  • ……but hope, like its stock market cousins, ignorance, greed and fear distort reason.

-Jesse Livermore, From his trading manual

Mr. Praline: I’m sorry, I have a cold. I wish to make a complaint!
Owner: We’re closin’ for lunch.
Mr. Praline: Never mind that, my lad. I wish to complain about this parrot what I purchased not half an hour ago from this very boutique.
Owner: Oh yes, the, uh, the Norwegian Blue…What’s,uh…What’s wrong with it?
Mr. Praline: I’ll tell you what’s wrong with it, my lad. ‘E’s dead, that’s what’s wrong with it!
Owner: No, no, ‘e’s uh,…he’s resting.
Mr. Praline: Look, matey, I know a dead parrot when I see one, and I’m looking at one right now.
Owner: No no he’s not dead, he’s, he’s restin’! Remarkable bird, the Norwegian Blue, idn’it, ay? Beautiful plumage!
Mr. Praline: The plumage don’t enter into it. It’s stone dead.
Owner: Nononono, no, no! ‘E’s resting! …

-Monty Python’s Flying Circus Season 1 – Episode 08

I was reminded of all those quotes when I read the National Underwriter’ cover story from their May 26th issue that was authored by Sam Friedman that ran under the lede “Insurers Can Polish Their Image While Boosting Bottom Line“. Sam, whose blog was one of our original blogroll links here at Slabbed, felt compelled to author a companion peice on his blog that ran under the post title “Time for Some Tough Love on the Industry’s Image” no doubt fearing backlash from the insurance industry readers that support his trade journal. Both pieces left me stunned in how disconnected from reality Sam has become, his critical reasoning no doubt clouded by the revenue generated from the industry by his trade magazine. But before we analyze Sam’s column and blog entry we need to backtrack to last year and the posts we did on Sam’s indignation with the award winning Bloomberg story that detailed unscrupulous claims practices by insurers, “The Insurance Hoax“.

Sam called the work a “hatchet job” and did his best to torpedo it’s chances of winning the Deadline Club award for which it was nominated. He couldn’t be everywhere at once though and the cream truly does rise to the top so the Bloomberg piece, along with Becky Mowbray’s insurance reporting for the Times Picayune won awards from even more prestegiouos journalism trade groups than the Deadline club.

Sam was still steamed, especially after Dean Starkman at the Columbia Journalism Review subjected the Insurance Hoax to “the Audit” and found that the piece was indeed factually based, no doubt explaining it’s wide acceptance among professional journalists. Sam however, was having none of it prefering to remain in denial. So while I at the time I admired Sam’s passion we also got a peek at the partisan Sam, the one who Journalistic skills are clouded by the monetary realities of runnig a trade journal. One comment left on Sam’s original blog entry on the Insurance Hoax nailed it dead on, just like Monte Pyton’s dead parrot skit:

Do a consumer survey, or simply talk to your relatives and neighbors, for goodness sake! Ask them if they felt whether their insurer paid what was owed them. What more “proof” do you need? Continue reading “A view from the trenches: Stunning disconnect at the National Underwriter”

Just a Timestamp…

Yep just a timestamp. Go long the broad index, short the issue/sector. (JMHO)

Finally, it was surreal to listen to such a grim panel after the swank reception welcoming the attendees, courtesy of McGraw Hill. A variety of groups were given invitations (mine came via the New York Financial Writers Association) to attend at no charge and hear the panelists offer their views, with the function arranged by Columbia University’s Knight-Bagehot Alumni Committee (a scholarship program for business journalists).

We were on the 50th floor of the McGraw Hill, offering a breathtaking view of midtown Manhattan. There was a multitude of delicious finger foods, washed down by top-shelf booze from an open bar–with single malt, 12-year-old scotch the drink of choice for many, including yours truly.

The room buzzed, and for a moment it didn’t feel like we were all traveling on a sinking ship. But once the program began, I felt a bit like I’d been drinking champagne after the Titanic hit the iceberg. Might as well enjoy whatever good times remain while they last, right?

Play it again Sam, truer words have never been spoken. Bankruptcy is not only for the best, it represents the long term cure. Also a big Slabbed welcome to the folks at McGraw Hill. I heard the construction version of the McGraw Hill 2009 economic sing-a-long in NOLA. Bleak picture no?

[youtube=http://www.youtube.com/watch?v=D8SfiCnwF28]

Continue reading “Just a Timestamp…”

A Sam Friedman Must Read ….

While I was making the online rounds Saturday I noted National Underwriter Editor in Chef Sam Friedman has yet another blog entry on “the need for an iconic insurance superhero to serve as a positive role model and help improve the industry’s poor public image. That line of blogging generated Mr Friedman “a fascinating letter from Donna J. Popow, senior director of knowledge resources and ethics counsel at the American Institute for CPCU and the Insurance Institute of America.”

“Shortly after Hurricane Katrina, I was asked to do a spot on a local Philadelphia news station. I talked about what homeowners could do to get ready for a catastrophic event.

“After that spot I went to the producers and suggested to them that the real story coming from Hurricane Katrina was the work of the adjusters on the ground handling claims. They agreed with me, and asked if I could find them adjusters to speak with.

“I contacted several adjusters who I knew were handling claims in Louisiana and Mississippi. Each adjuster I contacted thought the idea was a good one–and each of their employers refused to give them permission to participate.

“As a lawyer, I can understand why; as a claims person, I was bitterly disappointed.

“As an industry we have done very little to publicize the good that we do. Usually the only publicity we get is in a law journal, where even a win for the industry is cast is a negative light because it usually means a policyholder or a claimant isn’t getting paid.

“Why shouldn’t our industry pat itself on the back for mustering hundreds of adjusters on short notice to respond to a catastrophe? Why shouldn’t the rest of the TV-watching, newspaper-reading public learn that these men and women—many of whom are volunteers—leave their families for weeks (or even months) on end to work these catastrophes, meeting with policyholders in extremely stressful situations, and diligently settling claims?….. Continue reading “A Sam Friedman Must Read ….”