It’s Like An Enron, But For Insurance | Hacker News Reader

It’s Like An Enron, But For Insurance

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4 pointsmncolinlee9 comments

The connection to Enron is bizarre.

The author seems not to know why Jeffrey Skilling went to jail. You don't go to jail for having a failed company. Very strange claims all around.

Skilling was charged with fraud, conspiracy, insider trading, and lying to auditors.

I agree, I think what the author was trying to say that even Climate Change deniers don't actually believe that Climate Change isn't real, only that it doesn't match their beliefs or would hurt their profits, and therefore ignore the reality and therefore would be committing fraud in perpetrating the denial.

Either way, it's a pretty poor connection.

Agreed.

Don't know why or even if insurers are pulling out of the U.K., but you don't have to use "climate change" to explain what's happening in Florida, it's a hurricane magnet (although not since 2005) and the state government has heavily intervened in the market, runs a unit that covers 21% of the residential market. It's not financially sound from what I've heard, so private insurance companies who can't make up future losses by raising taxes are obviously at a disadvantage.

There's also quite some distance from "climate change" (predicted by computer models but not been happening for more than a decade) to "increased adverse weather" (totally speculative) to "let's start an insurance company!" (in a state that still has ones covering 79% of the residential market), and trying to compete with the government.

Which has a really crazy criminal justice system (doesn't matter which side you're on in the Zimmerman-Martin case, it's obviously crazy and politicized all the way to the top (AG and governor)).

The connection should have been spelled out. Enron chose not to provide power just as this bankrupt insurance company would not provide protection from risk. Both organizations only prosper due to fabrications.

I was arguing that someone who is so sure about climate change being a hoax would likely be drawn to fabricate forward looking statements and lie about financial results. Otherwise, the entire investment thesis fails.

Investors generally have to have a reason to believe that the company has some sort of potential.

Ah, well this is old now, but since you're the author I'll respond anyway because I think it might help you in the future. I think you got a little dramatic with a weak connection:

> "If you turn out to be wrong, you will likely be jailed like Ex-Enron CEO Jeffrey Skilling."

So your argument is that you'll likely go to jail because you'll likely lie because your company will likely fail. That's more than a bit of a stretch.

It might help you to know that you undermined yourself and your point with this sort of dramatic claim. You had a really good thought going: if you think climate change is not happening, bet against it! There are enough people betting for climate change that you can probably make money. No need to make a sloppy connection to Enron.

Again, by way of advice, I don't think people believed that insurance companies are pulling out of Flordia or the UK, and I didn't believe you had the facts to even prove they were raising rates because of climate change. I'd believe they are, but I want more than conjecture I could do on my own. Establish your premise a bit, build your credibility, and avoid the weak claims - had you done that you'd have a solid article that could have done well here.

I, too, am hesitant to respond to an old story. That's especially the case because some offended denialist on this thread is downvoting all of my comments out of pure vendetta.

Perhaps you're right about the jail claim reaching too far. I didn't think it was too much of a stretch to guess that a company founder would fight to keep his company's investment thesis sound.

I did indeed have the data to back up all of the insurance market claims, but wanted to make this a self-contained article rather than direct people away to footnote links. Here's an industry paper written by employees from a plethora of reinsurance companies. The paper directly argues for higher rates to account for risk models failing to account for worst case climate scenarios and somewhat lower rates where climate mitigations are used. They also cite an academic paper describing how UK flood and Florida wind storm insurance markets will become uninsurable without climate mitigations.

https://www.genevaassociation.org/media/616661/ga2013-warmin...

The UK had such a hard time keeping their insurance against floods that they had to enact government protections to stop insurers from pulling out of the market completely.

http://www.theguardian.com/money/2013/jun/27/flood-insurance...

Thanks, interesting sources :)

Is he calling for just jail time for the "deniers" or the death penalty like this professor http://www.americanthinker.com/2012/12/professor_calls_for_d...

Bizarre. I didn't think anyone would so completely miss the point. There isn't a single insurance company in the world that makes business decisions on the premise that climate change is fake.

If a denier is so sure, there's a huge and ridiculously obvious opportunity to either get blindingly rich or else lie on financial reports as the business fails.

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