The End of Accounting and the Path Forward for Investors and Managers

Chapter 13Strategic Resources & Consequences Report: Case No. 2—Property and Casualty Insurance

The insurance industry is classified into three segments: property and casualty (PC), life and health (LH), and reinsurance (entities insuring other insurance companies). This chapter presents the Strategic Resources & Consequences Report for the first segment—property and casualty—the largest segment of the industry in terms of number of companies and customers. The PC business is fiercely competitive and its risk is high relative to other insurance segments, particularly due to catastrophic risks. Smart investors in this industry, as in others, focus on the company strategy and its execution, and particularly on the most important strategic asset—the customer franchise. All this is fleshed out by our proposed Report.

The insurance industry doesn't need extensive introduction. Practically everyone is a customer, and most are disgruntled (too expensive, overly bureaucratic, frequently deny claims). But this is just the not-so-pretty face of your insurance company. Most, except for experts, know next to nothing about the business of insurance. If corporate financial reports are generally opaque, insurance companies' reports are outright incomprehensible. We will clear the mist, focusing on the crucial information for investors.¹

Sector Synopsis

The insurance industry is classified into three segments: property and casualty (PC)—damage or loss to cars, homes, or businesses; ...