(18) The basis for success in insurance business is underwriting. True underwriting. But what if underwriting guidelines are not really about underwriting? That's the beginning of the end! In all, simply a purposely faulty designed "Flywheel System"!

Sent: Thursday, xxxxxxxx xx, 19, xxxx 12:42 PM
To: ' xxxxx.xxxxx@xxxxxx.xxx
Subject: RE: xxx18xxxx XXXXX XXXXXX XXXXXXXXXXX XXXX xxx xxst xxxxxxx

Hi, xxxxx,

Despite our diligent reasoning and submissions, unfortunately your renewal quote is to be 'maintained', with various substantial increases, especially on Earthquake!

Please kindly let us have a revised quote with EQ deductible being increased to 20%, as you suggested, and we will present to the client.

It seems insurance business, especially underwriting, is no longer about reasoning and common sense anymore, or even about underwriting, actually anything but, and instead in the form of ever increasing amount of underwriting rules and guidelines as a result in practising the "business model", which are out of your control, and of course also out of our hands!

We have experienced and survived these 'phenomena' many many times, over the years, in different forms and from different markets that simply 'disappeared' in M&A, but recently just getting more and more unreasonable and unable to be comprehended!

We will work on the file and the client, and revert in due course.

Hope we can still retain the account.



From: xxxxx xxxxx [mailto:xxxxx.xxxxx@xxxxx.xxx]
Sent: Thursday, xxxxxxxx 19, xxxx 8:34 AM
To: xxxxxxxxxx
Subject: RE: xxx18xxxx xxxxxx xxxxxx xxxxxxxxxx xxxx xxx xxst xxxxxxx

Hi xxxxxx,





EQ is where the largest increase is and again, we are not able to reduce this at all. Increasing EQ ded to 20% in an option to decrease the premium. Please let me know if you want a quote on this basis.

Hope this helps explain where the premium increase is. 10% rate increases are very standard in today's market.


Best Regards,


xxxxx xxxxx xxxx xxx

xxxxxx xxxxxxxxxxx, xxxxxxxxxx xxxxxxxxx

From: XXXXXXXXXX < xxxx@xxxxxxxxxxxxxx>
Sent: Wednesday, xxxxxxxx 18, xxxx 3:44 PM
To: xxxxx xxxxx < xxxxx.xxxxxx@ xxxxxx.xxx>

xxxxx, thanks for your risk improvement comments. Will forward to Insured accordingly, so as to imporve further.

You said the rate increase was because of Earthquake, and that it was a realty driven account and as such rate increases are HIGHER than average...................

The Insurance situation is a big mess right now in xxxxx Luckily it is not a condo, which we don't have (that many) anyway! Your company probably have few "pens" out there that ................, not counting also...............! But that has nothing to do with you or with us, or this super almost clean and claim free account!

Anyway, I hope you can give it your best consideration and reduce, or we might just get fired and not having the account to talk about anymore!

Please advise.


xxxxxx xxx

An astute reference from a famous book, together with our adaption in blue.

STAY ON THE FLYWHEEL ... AND OUT OF HOW THE MIGHTY FALL . (Not just for a company, but for an industry, or even a country!)

In Studying the horrifying fall of once-great companies, we see them abandoning the key principles that made them great in the first place. They vest the wrong leaders with power. They veer from the First Who principle and cease to get the right people on the bus. They fail to confront the brutal facts. They stray far beyond the Fundamental Principles of the insurance business concept, throwing themselves into activities at which they could never become best (or win) in the world. They subvert discipline with bureaucracy. They corrupt their core values and lose their purpose. And one of the biggest patterns exhibited by once-great companies that bring about their own senseless self-destruction is failure to adhere to the flywheel principle. And not only that, the key is, what if the "Flywheel System" was wrongly designed originally, and purposely, and allowed to evolve away and deviate from the said Fundamental Principles of insurance business concept, namely, Utmost Good Faith and True Agreement of Minds? No wonder. Agreement to buy is NOT True Agreement of Minds on the insurance contract in question!

In our research for How the Mighty Fall, we found that the demise of once-great companies happens in five stages: (1) Hubris Born of Success, (2) Undisciplined Pursuit of More, (3) Denial of Risk and Peril, (4) Grasping for Salvation, and (5) Capitulation to Irrelevance or Death. Take special note of Stage 4, Grasping for Salvation. When companies fall into Stage 4, they succumb to the doom loop, the exact opposite of building flywheel momentum. They grasp for charismatic saviors or untested strategies or big uncalibrated cannonballs or cultural revolutions or "game-changing" acquisitions or transformative technologies or radical restructurings (then another and another) or ... well, you get the idea. However, the issue is, hopefully, you are currently not at any of the said 'stages' ! Or perhaps, you are already in there, somewhere, yet don't know about it and don't see it yourself either, or simply in denial! So it is a DOUBLE WHAMMY for the whole insurance industry! Yet, still just don't care, or become like a poor Ostrich! Because it is happening in insurance business almost everyday, like clockwork! It is actually part of the current Old and Wrong Traditional Insurance Business Model. In not doing what is supposed to do, and doing what is not supposed to do! Frequently, simultaneously and habitually! Insurance Business in its current form and shape is just constant Multiple Whammy, self-imposed and self-endured! Stakeholders are like as if lining up to become victims, helplessly! Isn't insurance business supposed to do insurance, and make money properly? What is the impact for society and the world? Continuous misleading misconceptions?