The Future of Insurance – Underwriting vs. VC – Like The Show "Stranger Things"

Episode Info

In this episode, I explore the paradox that is insurance. We buy risk from others, yet we are risk averse ourselves. Looking at the work of underwriters as compared to venture investors, you find that the skillset is actually nearly identical, but it's being deployed in opposite directions. I discuss that, why that might be, and what someone trying to bring innovation and change to insurance should keep in mind given this reality.

Episode Highlights

This episode is a unique and shorter installment with insights and reflections rather than our normal interview format. The focus is on exploring the concept of risk aversion within the insurance industry and comparing it to the venture capital world.

Key Topics Discussed:

1. Risk Aversion in Insurance:I see a paradox of risk aversion in an industry that essentially deals with buying and managing risk. Despite being in the business of risk, the insurance industry tends to be conservative and slow to change.
2. Comparison with Venture Capital:A comparison is drawn between underwriters and venture capitalists, highlighting how both evaluate businesses but from different perspectives. While venture capitalists have a capped downside and potentially unlimited upside, underwriters face a capped upside and potentially unlimited downside.
3. Analogies and Insights:I compare this to the Netflix show "Stranger Things" to describe the contrasting worlds of insurance and venture capital, likening them to the "Upside Down" and the real world.
4. Economic Perspectives:Discussion on the economic frameworks within which underwriters and venture capitalists operate, emphasizing the differences in risk and reward dynamics.
5. Personal Reflections:The episode includes personal anecdotes and reflections on the nature of risk, decision-making, and the psychological aspects of dealing with uncertainty.

Conclusion: The episode concludes with a call to embrace conversations about risk and change, encouraging listeners to prepare for and adapt to new challenges in their professional environments.

This episode is brought to you by The Future of Insurance book series (future-of-insurance.com) from Bryan Falchuk.

Follow the podcast at future-of-insurance.com/podcast for more details and other episodes.

Music courtesy of Hyperbeat Music, available to stream or download on Spotify, Apple Music, and Amazon Music and more.