In Bermuda, we have recently suffered through a painful general election. Many Bermudian blacks have chosen to believe that nothing done prior to 1998, when their Progressive Labour Party was elected for the first time, was any good. Woe betide the man or woman who dares say otherwise, even though that view is essentially ridiculous.
As a result, nothing the governing black political party does or says now can be wrong. An official program of impeding the economic progress of white people, to allow blacks to catch up, is now the order of the day. I'm not making this up: Our leader, Premier Ewart Brown, told the BBC as much in almost those words.
Bermuda residents suffer from an unnecessarily high tax burden. I can hear you laughing, but it's true. We pay way more tax on earned income than common sense or economic necessity dictates. Yet when the opposition United Bermuda Party (considered white although it's really fifty-fifty) offered to remove income taxation from everyone earning under $42,000 a year, the party went down to a serious defeat, its third in a row. It's not that Bermudians like taxes; it's just that Bermuda these days is in the business of trying to disprove the saw that two wrongs don't make a right.
Once I shifted my perception to accept this seemingly bizarre conclusion, confirmation sprang up everywhere. I noticed that Caleb Crain (who with a name like that could only work at The New Yorker) refers to a person of indeterminate sex as "she."
I've never met Mr. Crain, but I know how his mind works. Since biblical times, we have used the male possessive to stand for the human race: Let he who is without sin ...
Mr. Crain has subsumed the modern religion of political correctness into his writing process by using "she" rather than "he." But "she" is exactly as wrong as "he," and two wrongs don't make it right.
Then it hit me. Isn't that exactly the principle by which the insurance industry operates, year in and year out? Dennis Mahoney, chairman of Aon Global, has pointed out that insurance is inherently inefficient. No company has exactly the right amount of capital; it has either too much or too little. And no company ever gets its pricing exactly right--it either overcharges or undercharges.
Property-catastrophe pricing, for example, suffers from an eternal yo-yo effect. In 2005, premium pricing was set too low for the subsequent experience of Katrina, Rita and Wilma. Companies lost their shirts and, in some cases, their britches. So in 2006, North American premium rates soared, only for the Atlantic hurricane experience to make a mockery of the pricing again.
In the grand scheme of things, it doesn't much matter if Bermudians tax themselves out of existence or if The New Yorker dignifies political correctness, although observing either is akin to watching a space shuttle explode in slow motion. Insurance, however, is rather more important than either Bermuda or a magazine.
Managing the bedrock of global trade on the principle that two wrongs make a right is a foolhardy practice. For some major insurers, the principle may have worked down the years, but for many more companies, it fails, as do the companies themselves. The adage holds true: No number of wrongs will ever make a right.
ROGER CROMBIE is a Bermuda-based columnist for Risk & Insurance®.
February 14, 2008
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