Michael Sean Quinn, Ph.D, J.D., C.P.C.U., Etc.
             Law Offices of Quinn & Quinn

             2630 Exposition Blvd #115

             Austin, Texas 78703

            (o) 512-296-2594

            (c) 512-656-0503

              mquinn@msqlaw.corn



          In early September of this year, round
about September 9, 2014,

Alan Greenspan, a former Secretary of the Treasury, gave the
keynote address at KPMG’s 2014 INSURANCE INDUSTRY CONFERENCE. He listed 9
reasons why the U.S. economy stinks.  One
of the reasons he gave was “Nobody Appreciates Insurance Enough.”

          His reasoning
was that insurance is really nothing more than saving for a rainy day, and in
our country, saving-through-insurance is a major source of saving. There have been no new actuarial
methods for that since they were  invented
in the 18th Century by a couple of Christian ministers in Scotland.

          But it is not
given enough weight by economists, and it needs to thrive so that it can invest money in the new technology. So that’s one of the reasons for the stinking.  You know the one, don’t you? That the one with uniformly record high  stock prices. 
          Premise #1. One might be
doubtful about the soundness of this being said by a paid speaker at a convention of people from
the insurance industry.  Premise #2.  Greenspan was being paid plenty to speak, and he says something that will please the crowd no
end. Conclusion of Syllogism. 

The assertions in Greenspan’s speech are subject to more than passing skepticism.

          But there may
be something just as important casting doubts. 
What he said about insurance was either misleading or false. Sound actuarial methods were begun developed in the 18th Century, and a bit before actually, but there were not extensively used
immediately. Moreover, early life insurance worked on gilt system; it was mainly connected to maritime insurance; live insurance policies were originally issued for one year terms where comprehensive actuarial methods are not needed much; reliable and compreshesive mortality tables took quite a while to develop; and even during the early days  many were suspicious of
those ideas. It looked too much like gambling. They also did not have at their disposal other kinds of facts that are needed for
sound statistical analysis, e.g., causes of death. (This is true even though the astronomer Halley read a key paper to the Royal Society on the death rate in Breslau since it did not have the problems of London and Dublin, at least partly because the record keeping was defective, even shoddy. 

Moreover, actuarial methods have developed in sophistication
tremendously in the last—Oh! Say—250, or so, years (1750-2100).

.Moreover, Greenspan appears to
address only life insurance. Property and casualty insurance is not
particularly a method of long-term savings, and many insurers lose money of the
insurance sides of their businesses and make their money elsewhere, granted that
they use some of the flow of premium dollars to finance those other services. Of course, heath insurance is a relatively recent offshoot.

Of course, insurance is crucial to the economy. Insurance is big business.  It is important that it’s products be sold. And it’s important that insurers do their work–render required services–such as the adjustment of claims, in legally, business appropriate, and ethically required ways.  The same, of course, is true for the ways in which insurers treat intermediaries; they are crucial to selling the product, after all. 

                         Resumes: www.michaelseanquinn.com

Originally posted on 09/15/2014 @ 5:06 pm

Michael Sean Quinn, PhD, JD, CPCU, Etc

Michael Sean Quinn, PhD, JD, CPCU, Etc. (530)

One of Texas's leading insurance scholars, Michael Sean Quinn is a past chair of the Insurance Section of the State Bar of Texas and has a broad legal practice.

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