This is an online journal, of sorts. I am going to keep ideas here, develop thoughts. So if someone wants to follow that messy journey, they can.
Everybody’s gotta eat is a quote that has stuck with me for over ten years. I was a young attorney working for a partner. He summoned me to his office to talk about a claim stemming from a contract in the Middle East. He informed me that there was no signed, formal contract as this was abnormal in the Middle East.
“How can you do work without a contract?” I wondered aloud.
“Everyone’s gotta eat,” the partner responded.
One of the ideas that I am particularly focused on right now is social inflation. The phrase stems from a 1975 Berkshire Hathaway letter in which Warren Buffet blamed social inflation for poor insurance performance. Buffet describes it like this:
“Social” inflation caused the liability concept to be expanded continuously, far beyond limits contemplated when rates were established—in effect, adding coverage beyond what was paid for. Such social inflation increased significantly both the propensity to sue and the possibility of collecting mammoth jury awards for events not previously considered statistically significant in the establishment of rates.”Warren Buffett
So is this an insurance scapegoat? Or is there more to social inflation?