Older lives: It's about employment, pricing, and claims management
Peter Neilson's Speech at The Principles for Sustainable Insurance Conference

Ratings Agencies In Trouble

The Risk Management Monitor carries a piece at present about a US Justice Department investigation into S&P's role in rating mortgaged-backed securities. Whatever the merits of the investigation, if I were an American taxpayer I would be glad to hear of it. Any crisis that costs so much deserves to have all participants examined for their role. But politicians should not forget to consider their own failings: they created some of the curious distortions to the market as well - such as the federal mortgage insurance entities - which encouraged many of the poor practices that led to failure.

Back home we might consider the value of ratings. A high rating was assigned to AMI. Just what did that rating tell us? How could a rating have distinguished meaningfully between AMI and other companies that had less risk concentration and better preparedness? I am open to the idea that the answers may not be possible, or may not be economic, but they should be considered - especially as mandatory ratings for insurers are supposed to be part of the overall legal and regulatory protections for consumers.

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