According to unimpeachable sources (i.e Wikipedia – the lazy researcher’s friend) people born under the sign of the snake are intelligent but have a tendency to be somewhat unscrupulous. So, not cut out for a career in reinsurance then? I’ll let you be the judge of that. But another site, says the snake “…carries the meanings of malevolence, cattiness and mystery, as well as acumen, divination and the ability to distinguish herbs” – arguably all really useful for an reinsurance career.
The generally negative connotations of a snake chimes with Western thought, from the biblical story of the serpent as a tempter in the Garden of Eden onwards through to a formative image for me as a child: Kaa the python trying to devour Mowgli in the Jungle Book. Let’s consider some snake associations for synergies with the reinsurance market in the Year of the Snake:
A snake oil salesman sold a product with little or no value: oversold, over-priced, not fit for purpose. OK I’m biased, but reinsurance does not fit into that category. The global stability of the insurance industry through the financial crisis and recent record catastrophe years is testament to reinsurance’s value as a product. But the Year of the Snake will see a continued sophistication of reinsurance purchase. As more and more insurers codify and refine their risk appetite, reinsurance brokers and reinsurers will need to be more creative designing solutions that meet their needs to protect both capital and earnings.
A repulsive drink much loved by students in my youth for its potency and, allegedly, aphrodisiac (though more likely amnesiac) qualities. Now I can happily drink most things but the combination of the strongest lager and cider available topped off with a dash of black-currant cordial didn’t float my boat then (a real ale man) or now (a glass of New Zealand Sauvignon Blanc if you are offering).
Brute strength is not everything, taste and refinement matter too. Perhaps an analogy could be whether 2013 will be the year when biggest is best? It is undoubtedly true that the biggest reinsurers and reinsurance brokers have all the tools and the clout, but do they also have the fleetness of foot to meet their clients’ needs? Hammers not only crack nuts, they often destroy them. Willis Re is very alive to the need to work with our clients to use our armoury of skills and products to develop solutions appropriate their individual needs.
Snake in the Grass
Dictionary.com defines a snake in the grass as “a treacherous person, especially one who feigns friendship” or “a concealed danger”. My constant companion, if not friend, over recent years has been Solvency II. I blogged some time ago about Solvency II being like Groundhog Day. Since that blog the smart money on implementation has moved to 2016 or 2017, with “never” coming up on the outside. The gloves are off; even the regulators are getting candid. Andrew Bailey, the putative head of the UK’s Prudential Regulatory Auditory (a successor body to the FSA), said last week:
“I think there should have already been more accountability for how the processes of the European Union could have created such a vast cost for an industry for the implementation of a directive which has not even yet been finally agreed, and for which I cannot give you a date. Largely unseen in the banking crisis has been the shocking cost of Solvency II.”
Bronek Masojada, CEO of Hiscox, followed up later in the week with a killer quote: “Solvency II regulations are too costly, complicated and risk being ineffective in a crisis after 10 years in development.” He further attacked Solvency II’s approach to internal modelling and the UK’s FSA’s model approval process saying: “Imagine if we all drove cars with individually set speed limits based on the suspension and the wheels and the design of the car. Models can never be made that good.”
Now I feel a blog coming on around that last statement (watch this space). However, getting back to snakes in the grass, both these gentlemen clearly think Solvency II has been a concealed danger, but a feigned friend? I still think that there is much in Solvency II that is good, but much of the implementation terrible. Perhaps it’s not too late for true friendship to blossom (but I know where my money is).
I talked in my last blog about David “snakehips” Cameron’s Euro dance. Well since I wrote it looks like the boy pulled it off in the budget talks, striking an alliance with other net contributors to reduce the Euro-budget. But the problem has not gone away. As I write, the European parliament is threatening to veto the budget deal. But for the moment it looks like Cameron has backed the right horse—but with European horses, who knows where they will turn up.
With capital still sloshing around the reinsurance industry and pension funds desperate to find a home that provides a real return, the Year of the Snake is unlikely to be one of great prosperity for the re/insurance industry, especially as this year is a black water snake year – a one-in-60 event heralding a volatile year.
I’m reminded of the supposed Chinese curse “May you live in interesting times”. Sadly for a pig like me (Chinese birth year, an angel in all other respects) the omens do not look good. Perhaps Solvency II isn’t the job for life I’d previously thought….