Unbelievable Risk Discounts Rates

Setting discount rates is a crucial and subjective exercise. This is true for life insurance embedded values too. Many researchers are comfortable with a range for Equity Risk Premiums of between 3% and 5%. Many corporate finance practitioners use a range from 5% to 8% or even higher. My nearly eight-year-old blog post on mis-estimating […]

Why isn’t there more micro insurance in South Africa

After a recent Actuarial Society sessional presentation I gave on micro insurance and the regulatory developments, I was asked why there aren’t more micro insurers operating in South Africa. Here is a slightly paraphrased version of the full question: The larger insurance players seem reluctant to enter the market. Why do you think this market […]

ERP update – delayed response to a blog reader

I reader asked why so many practitioners use high Equity Risk Premiums in their valuations and fairness opinions. In particular, he mentioned a specific assumption set he had seen including: ERP of 6.8% company specific risk premium of 4% He also commented on how haphazard the use of risk premiums can be and referenced a […]

Credit Life regulations and reactions (1)

Credit Life regulations have been live for long enough now that insurers are starting to feel the impact and the shake-up of amongst industry players is starting to emerge. There have been plenty of debate around the regulations, in part because of the dramatic financial and operational impact they will have, and partly because of […]

Zero deductibles and innovation from insurtech

Insurance is misunderstood. Consumers ascribe malice where often practical restrictions are to blame. Take deductibles for example. A deductible in an insurance claim decreases the number of claims an insurer has to deal with. More than that though, it reduces the claims where the administration costs of checking out the claim and paying it are […]

Foreign land ownership

Foreign person? Foreign company? Foreign trust? Local company owned by foreigners? Local company owned partly by foreigners? Foreign company owned by locals? Local company owned by locals with debt finance from foreigners? ┬áLocal bank with foreign shareholders and repossessed properties? Local insurance company issuing policies to foreigners? BRICS bank? Foreigner married in community of property […]

Paris bans half all of all cars

Ok, only temporarily and the (almost) half that are banned change from day to day. A temporary increase in pollution levels has sparked the emergency measure. I’m fortunate enough to live close to where I work with the wonderful MyCiti bus available as a genuine alternative to get to work. Imagine a world where I […]