Jump to content

How to learn about the insurance business


netnet
 Share

Recommended Posts

My nephew has taken to Buffett/Munger's dictum about building a circle of competence.  For whatever reason, he wants to learn about the insurance industry.  Well I don't know very much about insurance to tell the truth.  So, I directed him to a reinsurance broker I know.  I also suggested that he re-read BH's annual letters.  

 

But I know that there are insurance gurus on this board.  So the question is--What would you suggest that an enterprising sort do to get to level so that he knows what he doesn't know?

 

thanks

 

netnet

Link to comment
Share on other sites

My nephew has taken to Buffett/Munger's dictum about building a circle of competence.  For whatever reason, he wants to learn about the insurance.  Well I don't know very much about insurance to tell the truth.  So, I directed him to a reinsurance broker I know.  I also suggested that he re-read BH's annual letters.  

 

But I know that there are insurance gurus on this board.  So the question is--What would you suggest that an enterprising sort do to get to level so that he knows what he doesn't know?

 

thanks

 

netnet

 

 

That takes humility, not knowledge.  In my case, I was too smart to learn that lesson, except by falling on my face more than once.  Ouch!  

 

Failure can be the most powerful reality check.  As an uncle,  you'll be wise to let him fall down, while cautioning him not to learn that way while he's rock climbing.

Link to comment
Share on other sites

As an uncle,  you'll be wise to let him fall down, while cautioning him not to learn that way while he's rock climbing.

 

LOL.

 

Taking what twa said, show him some basic metrics. Give him a basket of 10 companies with 2-3 crappy ones in there and $200-$500. Tell him after 2-5-whatever years he keeps whatever it returns, but you get 80% of the basis or something like that. He would have to pick 1 insurer, 1 reinsurer, and 1 whatever.

 

I am sure he would be quite interested and will learn naturally over the next few years. Its what I did, except without a nice uncle to spot me the money. Also have him listen to some LRE conference calls.

Link to comment
Share on other sites

Hi Netnet,

 

I think the best lesson is as you've suggested to read Berkshire's letters.  I would also suggest reading Fairfax's letters from the first annual report in 1985 when it was still called "Markel"! 

 

Fairfax is almost entirely an insurance and investment business, so it would probably be a better case study in insurance than Berkshire.  With Prem's successes and lumps, your nephew will also learn alot about what works and what doesn't.  Cheers!

 

http://www.fairfax.ca/financial.htm

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
 Share

×
×
  • Create New...