NT Wright on Jesus' Ministry

We know why Jesus died, but why did he live? What was his three year ministry all about? Was it just something to do until the time was right for him to be sacrificed? Was all that feeding the hungry, healing the sick, raising the dead, securing fine wine at Cana, throwing out the money changers, telling parables, preaching on the mount, much less important than his dying and rising? A mere warm up to the final main act?

These are the questions raised by N. T. Wright during a daylong series of lectures given at Christ Church in Greenwich Connecticut in May, 2011. Reverend Wright is an Episcopal cleric who has written numerous scholarly books on various aspects of Christianity.

He points out that the Nicene Creed, which is recited in their services by nearly every main stream Christian denomination, skips over his 33 year life and jumps directly from his birth to his death:

…..

For us and for our salvation
he came down from heaven:
by the power of the Holy Spirit
he became incarnate from the Virgin Mary,
and was made man.

Jump

For our sake he was crucified under Pontius Pilate;
he suffered death and was buried.
On the third day he rose again
in accordance with the Scriptures;

Those who do not believe in Christ’s divinity want to ignore the crucifixion and concentrate on his ministry, pointing out what a good example this best of all men is to all of us. Often those of us who do believe that Christ was the son of God tend to focus more on his death and resurrection and downplay what he did while he was alive and walking among us.

Wright asserts that Christ’s ministry on the one hand and his death and resurrection on the other need to be viewed together—the one shedding light on the other. Heaven and earth are not separate and different; space, time and God “overlap, intersect, and interlock.” Heaven is here, now on earth and there is a continuum from this life to the next. Things to us may not always seem so heavenly from day to day, but neither were they for Christ while he walked among us. However, he taught us how to live and how to work to bring Heaven about in our lives and into those of others. Jesus has not gone away, according to Wright, he is just in God’s space but interlocked and present in ours.

Why did Jesus spend his life with us? There are four reasons, says Wright.

First, to show us how to get to Heaven. He gave us his examples and his prayer which says “thy will be done on earth as it is in Heaven.”

Second, to set out his teaching. The Sermon on the Mount is a good summary of his teaching—forgiveness, charity, and love towards others, were some of the hallmarks of his instructions.

Third, to demonstrate that he was perfect so his sacrifice would be perfect.

Fourth, to demonstrate his divinity through his miracles. Wright says he doesn’t like the term “miracle’ because it separates God from the world; it gives the “the idea that God exists outside natural processes and sometimes reaches in and does something and then pushes off again.”

There are four narratives in the Gospels, according to Wright, summarized in my words as follows.

1. Jesus is the climax of the story of Israel. The story of Israel is not that of a traveler who sets out on a journey keeps to the path and ends up at his destination. It is the story of someone who begins a trip, misplaces his map, gets blown off course, lands in quicksand, gets turned around and totally loses his way.

The story of Israel is remembered in the Gospels. The Jews at the time of Jesus did not believe they had been rescued completely from Babylon. They were back home, for sure, but they were still occupied by a foreign power. They were waiting for a Messiah to rescue them. The reason Israel’s story matters is that God has chosen these people as his own, and all four Gospels make reference to this.

2. The story of Jesus is the story of Israel’s God returning. Matthew refers to Immanuel—God with us. As another example, Mark talks about the prophesies of God’s return to Zion and then Jesus is born.

The beginning of the good news of Jesus Christ, Son of God, as it is written in Isaiah the prophet: Behold, I send forth my messenger before thy face, who shall prepare thy way; the voice of one crying in the wilderness, Prepare the way of the Lord, make straight his paths.

3. Jesus is seen as re-launching God’s renewed compact. The Gospels are foundational texts of a new movement of Yahweh’s people as the children of God.

4. The Gospels are the story of God clashing with Caesar and worldly powers and God’s victory over kingdoms of the world as well as pagans. Israel certainly had to contend with worldly powers—Pharoah, the Phillistines, the Babylonians, the Persians, the Romans and others. Jesus, who said his kingdom was not of this world, was also forced to deal with the evils of the world, but he overcame them by rising from the dead. And even while he was suffering he echoed his sermon on the mount—forgiveness for his tormentors.

Since the Enlightenment, church and state have been kept separate. According to humanists, the Church is a part of the problem not the solution. Voltaire, Rousseau, Hume, Locke—they all said that religion is just to be tolerated and should have no involvement in government. And with some radical Muslims seeking a Caliphate, whatever that means, the modern world has taken a dim view of any kind of Theocracy. But the Gospels foresee a combining of the God and state as the ultimate destination of the world.

Finally, Wright states that the four Gospels all declare that the Kingdom of God has arrived; the beginning of the end is now. According to the Enlightenment, the New World began sometime in the 18^th Century when humankind became free of the strictures of religion. We don’t need religion anymore; we have reason, knowledge and SCIENCE. (“She blinded me with SCIENCE!”—I just had to say that.)

Above his head while he was on the cross was the inscription INRI—“This is Jesus, the king of the Jews.” It was put there to mock him, to show what happens to men who aspire to that position, but to his followers it was and is a simple truth. Through his example in life and through his resurrection he earned that title.

So, Heaven and Earth are one and the same, or will be at some time, not with the love of power but with the power of love. Take those words seriously. Yes they are a play on words but they capsulize our mission. The Holy Spirit is here on Earth to help us achieve that.

“In the same way, let your light shine before others, that they may see your good deeds and glorify your Father in heaven.”

Here is the Sermon on the Mount:

http://www.biblegateway.com/passage/?search=Matthew+5-7&version=NIV

It is Christ’s instructions for achieving a Heaven here and now.

We are all human and it isn’t easy to forgive, love, be charitable, love our enemies, abandon “an eye for an eye” etc. Don’t I know that.

But we need to try

The Montefeltro Conspiracy
By Marcello Simonetta
Doubleday, 2008

Warring states, balance of power, unfettered ambition, shifting loyalties, people with unpronounceable names, coded messages, suicidal assassins, religious orthodoxy, wealthy bankers, torture, spectacular art. Sex!

These are the chief ingredients of this book which validates once again the comforting adage that the more things change the more they stay the same. The players on this stage of late 15th Century Renaissance Italy are flesh and blood people driven by the very same passions that we see today throughout the world, 500 years later. What are these passions? The love of glory, prestige, communion with god, great art, money, and women (and men). There is very little actual virtue to be found in this book, even (or especially) on the part of the reigning pope, Sixtus IV, who is famous today as the driving force behind the Sistine Chapel paintings. Back then he was just another super ambitious tin pot potentate.

The book revolves around Lorenzo de Medici, Florence’s leading financier and its effective ruler who lived from 1449 to 1492. Known during his lifetime as The Magnificent, he was a devoted patron of the arts helping to support such giants as Leonardo da Vinci, Botticelli, Domenico Ghirlandaio, and Michelangelo, among others.

The book begins in 1476, when Galeaza Maria Sforza (1444-1476), the dissolute and self-indulgent Duke of Milan, an incorrigible womanizer, was stabbed to death while attending mass at the Church of St. Stephen in Milan. He decided to go to this mass because he loved the beautiful music of the ducal choir and, perhaps, to ogle the pious young women in attendance. But hardly to do honor to God. He was murdered inside the church by three youths with a variety of grudges against him. They were soon to follow him into the next world at the hands of Galeaza’s obviously ineffective bodyguards.

Galeaza was a close military ally of Florence and his death upset the balance of power among the various city-states on the Italian peninsula, triggering an effort by the pope to extend his temporal power over Tuscany, of which Florence was the capital. He intended to place his 17 year old nephew, Riario, recently elevated to the level of Cardinal, in control of Florence. But first, of course, he had to eliminate the Medici brothers, Lorenzo and his younger brother, Guiliano.

To do this, he gathered a group of hired military men as well as a Florentine merchant family, the Pazzi’s, who were envious and resentful of the greater success of the Medici clan. The chief military plotter was Federico da Montefeltro (1422-1482), the Duke of Urbino, who until very recently was thought to have had no part in the scheme. The plotters expected that once they did away with the Medici brothers, the Florentines would welcome them with open arms as liberators from these tyrants. (Sound familiar?) It did not work out that way at all much to their chagrin as many were horribly butchered on the spot by a hopping mad populace. To their everlasting but short lived surprise, no flowers or candy was tossed at them.

The attack on the Medici brothers took place on Ascension Sunday, in April 1478 during mass at the Duomo, the beautiful main church in Florence. The assassins, two Pazzi brothers, dressed as monks first struck Guiliano who was at the time listening to the Agnes Dei—_Lamb of God who takes away the sins of the world”. (He was sitting at the time next to Cardinal Riario, who expected to take control of Florence.) They assigned the murder of Lorenzo at the last minute to two disgruntled local priests who bungled the job, allowing him to escape.

There is much more to this story, of course. The author, Marcello Simonetta, a direct descendent of one of the key players in this murderous soap opera, came upon a long coded letter in 2001 that had never before been deciphered. In that far away time, because diplomatic letters between states sometimes fell into the hands of enemies, they were written in secret codes. Simonetta cracked the code and uncovered a much more extensive scheme involving many more people than had been previously thought.

The plot became much thicker and far more interesting when he found out the message of the secret letter.

Charles Darwin and the Struggle for Survival

Charles Darwin, who lived from 1809 to 1892, is responsible for the theory of evolution, the idea that all organisms adapt to their changing environment and over time can modify in their appearance, physiognomy and internal makeup. But before describing the process of evolution, he wrote about the struggle for survival that all creatures go through. The struggle for survival is central to understanding the concept of evolution. In fact, Darwin says that it is important, but sometimes difficult to bear it in mind.

This struggle takes two forms: the perpetuation of the individual and its progeny. The grass plant, horse, mouse eared bat and ivy possess an internal force to themselves endure. They also spend much of their existence reproducing offspring. The effort to survive individually and in progeny is common to all organisms (ignoring for the moment that humans can commit suicide.)

Darwin says that in nature there is an ongoing ebb and flow of creation and destruction. Organisms produce seeds, offshoots and young and other forces destroy much of what is produced. These other forces can be similar organisms competing for the same resources, predators, or adverse weather. For example, oak trees produce hundreds of acorns but most of these are eaten by animals or fail to thrive because the soil they fall on is not fertile. Birds lay numerous eggs which are eaten by rodents or other birds. And even if the eggs hatch, the chicks are in danger of becoming the prey of foxes, wolves or hawks.

Some creatures produce high numbers of potential offspring and other creatures small amounts. For example, rabbits, mice, mosquitoes, dandelions, and oak trees have the potential for generating vast numbers of successors. Elephants on the other hand, according to Darwin (and I have no independent knowledge about this) produce about three calves in their 90 years of life.

Left to their own devices and in the absence of adverse factors, organisms would spread over an entire region propagating geometrically. If there are no predators and resources are abundant and the environment (chiefly the weather) is favorable then an organism will multiply and reach high numbers in a short time. This has been observed over and over again as when a plant of animal is introduced into another continent where there are no predators to keep the number down.

The only factor that would inhibit the unlimited spread of the organism is the other members of the species competing for resources—fertile soil, water, prey, food plants,
etc.

Whether a creature produces high numbers of offspring or small amounts is not a good predictor of how many of the species will survive. Normally those organisms that generate great amounts of potential successors will experience vast destruction of the progeny. Most acorns are eaten by animals of the forest. And those who create just a few new members of the next generation will see them all survive. Elephants have few if any predators.

With this ongoing clash of creation and destruction in living things, it is easy to see that any small variation in the structure or physiognomy of a plant or animal that allows it to avoid its demise will be favored. White butterflies are more easily spotted by birds and eaten while dark butterflies may avoid detection. Swifter deer will outrun the wolf and the slower ones will not. These favorable variations will be passed along to future generations of the species in greater proportion because these organisms survive in greater percentages. Those without these favorable variations will survive in smaller shares of the whole.

It is this gradual changing in any species toward the favorable variations and the ultimate disappearance of those with detrimental variations that Darwin calls Natural Selection. The continuous change in organisms toward characteristics that allow them to survive predators, competition with others of the same species, and scarce resources is called Evolution.

Seneca on the Shortness of Life

Seneca, was a Roman philosopher/historian/civic leader, who lived from 5 BC to 65 AD. He wrote a book about the shortness of life and the need to make the most of it.

In some ways it is very ancient but in others it is quite modern. He refers to contemporaries and institutions from long ago and far away and that make it seem very old. He talks about Caesar Augustus, invading countries, and punishing slaves. Women are not really considered except as harlots. These things are foreign to us.

But he talks about behaviors that happen today and are commonly seen. People wasting their time collecting Corinthian artifacts which go up in price because of a mania among other foolish collectors. Flaunting their money or glory. Erecting huge palaces to themselves. Eating, drinking, lusting, Having huge banquets to influence politicians. Building grand mausoleums for themselves so they could enjoy their glory after death. Everyone trying to get ahead, scrambling, pushing others out of the way.

One person was so rich and pampered that he had to ask one of his servants if he was sitting down. (Of course he knew if he was sitting down or not, says Seneca, but it was to show others how he didn’t even have to think about even the simplest of things. Others did that for them.)

These references to human frailty, shortcomings and foolishness make the essay seem so timeless and relevant. We can pull his ideas out of the page and use them immediately in our lives. No need to understand the Roman way of thinking or attitudes: they are just like ours. Seneca’s thoughts have lasted 2,000 years. There is a reason for that—they apply in every age.

Now for the details of his advice. Life is short. Your time is precious: use it wisely. If you had a fatal disease with a short time to live, wouldn’t you view each day as a precious gift? Wouldn’t you enjoy just being alive and dwell in the present? If you could somehow get one more day wouldn’t that day be as prized to you as the greatest jewel? Live that way anyway, because in a way we all have a fatal disease. Don’t ignore today wishing it would pass so some future time could be here more quickly. Don’t long for the future and grow weary of the present. Cherish your life today, as you live it today. Don’t become distracted by tomorrow.

As the song says, Tomorrow is always a day away.

He uses metaphors or analogies a great deal and they are perhaps a good way of understanding his points.

Life is like a journey.

It is like a balance sheet.

It is like a container.

1. Life is a journey or voyage.
First, make sure you are going somewhere when you start out and not just ending up where you began. Second, be aware of what you are doing as you make the journey.

This is how he explains it:

Can we say that an old man has lived long because he has white hair? Maybe not, says Seneca.


“he has not lived long—he has existed long. For what if you should think that that man had had a long voyage who had been caught by a fierce storm as soon as he left harbor, and, swept hither and thither by a succession of winds that raged from different quarters, had been driven in a circle around the same course? Not much voyaging did he have, but much tossing about. “

And here is another comparison to a journey. Be aware of the trip as you go along:

“Even as conversation or reading or deep meditation on some subject beguiles the traveler, and he finds that he has reached the end of his journey before he was aware that he was approaching it, just so with this unceasing and most swift journey of life, which we make at the same pace whether waking or sleeping; those who are engrossed become aware of it only at the end. “


2. Life is a balance sheet
Talk to an old man (Or put yourself in the shoes of that old man, really.) and say to him:


"I see that you have reached the farthest limit of human life, you are pressing hard upon your hundredth year, or are even beyond it; come now, recall your life and make a reckoning. Consider how much of your time was taken up with a moneylender, how much with a mistress, how much with a patron, how much with a client, how much in wrangling with your wife, how much in punishing your slaves, how much in rushing about the city on social duties. Add the diseases which we have caused by our own acts, add, too, the time that has lain idle and unused; you will see that you have fewer years to your credit than you count. Look back in memory and consider when you ever had a fixed plan, how few days have passed as you had intended, when you were ever at your own disposal, when your face ever wore its natural expression, when your mind was ever unperturbed, what work you have achieved in so long a life, how many have robbed you of life when you were not aware of what you were losing, how much was taken up in useless sorrow, in foolish joy, in greedy desire, in the allurements of society, how little of yourself was left to you; you will perceive that you are dying before your season!"

And so should we all maintain our balance sheet. How much of our time is taken up by wasteful activity? How much has been spent on things we can look back on with pride, happiness, or fondness? Fill your account book with the latter and reduce the former.

3. Life is a container

And so their life vanishes into an abyss; and as it does no good, no matter how much water you pour into a vessel, if there is no bottom to receive and hold it, so with time—it makes no difference how much is given; if there is nothing for it to settle upon, it passes out through the chinks and holes of the mind.


Here are some other interesting points he makes

1.Others take your time for granted as if it is of no value. If someone tried to take your money or your land, you would fight them tooth and nail. But anyone feels free to take up your time. Fight for that just as much.

2. Study the writings of great philosophers, historians and other writers. They will give you all the time you want. They will not turn you away. Aristotle will spend hours with you, Herodotus is available any day you would like.

3. We say we cannot choose our parents. But we can. We can be the children of all of these great people from the past. Let them adopt us.

4. The future is uncertain and the present does not last. Our past is our greatest treasure because it cannot be stolen or altered. Make sure it is a good one so that when you look back on it, you can say you did something worthwhile in your life.

Two last comments.

I guess Seneca himself is the best example of practicing what he preached. He wrote a number of essays that have lasted. That doesn’t bring him back from the dead, but while he was alive, he could look back and say that with the time he had he spent it productively. His account book looked pretty good. He knew where he wanted to go on his journey, got there, and enjoyed it as he went along.

The idea of living for today hits home with me. I lost two sisters, Donna and Jeanne, to illness a long time ago, and I think about them often and miss them enormously. I don’t take my being alive for granted and I try as best I can to make the most of it. And I appreciate that others around me themselves could be here for only a short time. I try never to forget that.

Insurance Insolvencies: The Reinsurer's View

Introduction

The relationship between a reinsurer and a cedant is meant to be a mutually beneficial partnership. It is characterized by a high degree of trust and good faith dealings. But when the reinsured company gets into financial difficulty and ultimately fails, that relationship can change overnight. The bond is loosened; the benefits are no longer mutual; and, the level of trust between the parties often declines.

For most of those involved with the insolvent reinsured — its policyholders, employees, investors, brokers, officers and directors — the failure of the company is an unmitigated calamity quite apart from any changing relationship with the company’s reinsurers. Coverages, jobs, investments and careers are lost. To those directly involved with the sinking enterprise, whether the company has a strong relationship with or can recover from its reinsurers is of secondary importance, and best left to the appropriate regulator to address.

For the reinsurer of the insolvent, on the other hand, the significant change in the relationship can be a mixed blessing. No reinsurer deliberately begins a relationship with a cedant that is clearly headed towards liquidation. But the failure of the ceding company can surprisingly bring some financial benefits as well as the expected headaches.

In the following section, we discuss the storm clouds that gather over the reinsurer when its cedant fails. Later, some unexpected silver linings are pointed out.

The Storm Clouds Gather

Once the ceding company is declared insolvent and a receiver for the estate is named, the company is transformed. It has changed from an ongoing insurance enterprise to a ghost of its former self, under state supervision with the receiver standing in the shoes of the insolvent.

To the reinsurer, the cedant isn’t the same cedant anymore.

1. Before insolvency, it investigated and mitigated policyholder claims; now that it has become insolvent, it is some times perceived as searching for claims.

(See, for example, in Missouri § 375.1208 R.S.Mo 3: “At any time the liquidator may request the claimant to present information or evidence supplementary to that required under subsection 1 of this section and may take testimony under oath, require production of affidavits or depositions, or otherwise obtain additional information or evidence.” Reinsurers sometimes grumble that liquidators are too exuberant in encouraging claimants to pursue their claims in the receivership.)


2. Before the cedant asked for money only when it actually paid a claim; now it asks for reimbursement even though it has not actually paid anything.

(Most reinsurance contracts are indemnification agreements requiring the reinsurer to reimburse the cedant only for the amount of losses actually paid. Since the estate does not pay policyholders immediately for allowances, reinsurers may believe that they are not required to make a reimbursement until actual payment is made. However, the insolvency clause, contained in nearly all US reinsurance contracts, requires the reinsurer to pay the liquidator without diminution because of the insolvency. See NY Insurance Law Section 1308(a)(2). )

3. Once the cedant tried to commercially resolve disputes with its reinsurers
informally; now litigation and arbitration are commonplace.

(Quackenbush v. Allstate Ins. Co., 517 U.S. 706 (1996); Corcoran v. Andra, 77 N.Y.2d 225; 567 N.E.2d 969 (1990). )

4. Previously, the cedant protected the reinsurer from excessive financial shocks ; nowadays it tries to engineer a commutation of the entire reinsurance contract.

(If they lose money in a contract year, reinsurers traditionally expect to be made whole by the cedant in the following years. Cedants also protect their treaty reinsurers by buying specific (i.e. facultative) reinsurance protection for a particularly volatile risk that would otherwise fall under the treaty contract. )

4. Formerly, the cedant would not draw down on a letter of credit; now it may threaten to do so.

(See, Robert Hall, Drawing Down Letters of Credit in an Insurer Receivership Context. 11 Mealey’s Lit. Rep.: Ins. Insolvency 21 (April 6, 2000). )

5. Previously, the companies could set off losses against premium; that has changed — the insolvent may now want to hold on any premium for as long as possible but have the reinsurer pay all losses as well.

(In Quackenbush v. Mission Insurance Co, 46 Cal. App. 4th 458, 54 Cal. Rptr. 2d 112 (1996), the California Court of Appeal upheld objections of reinsurers and the Reinsurance Association of America (RAA) to a plan by which the California Insurance Commissioner proposed to wind up the Mission estate through the estimation of outstanding claims and incurred but not reported (IBNR) losses. However, in Quackenbush v Mission Ins. Co. (1998, 2nd Dist) 62 Cal App 4th 797, 73 Cal Rptr 2d 95 the court approved an amended plan which expressly prohibited the Commissioner from requiring payment of incurred but not reported loss amounts from reinsurers until their liability for and the amounts of such losses were determined. See Angoff v. Holland-America Insurance. Court of Appeals Missouri, Western District 937 S.W.2d 213; (1996) where the court found no objections to collection of IBNR estimates from the reinsurers. )

To sum up, before insolvency the cedant was a business partner of the reinsurer; now it is a cash flow drain and a burdensome administrative strain. There are other drawbacks for the reinsurer. Valuable resources, such as time, staff, office space and money for travel costs, are devoted to winding down obligations under the terminated reinsurance contracts. These resources would otherwise be better used for working with continuing profitable active cedants.

Trust and agreement between the parties is often at low ebb, so more expenses are incurred to monitor claim handling and litigate or arbitrate disputes. Reserves stay on the reinsurer’s books longer because of inherent delays and uncertainty and because the liquidator needs more time to get organized.

There is also a danger of damaging the reinsurer’s reputation as a dependable, promptly paying partner because of the increasingly public and antagonistic disputes with the insolvent reinsured. This may be the greatest loss of all. A reinsurer lives or dies by its reputation as a longterm dependable partner of the cedant. An important element of its good name is the ability and willingness to pay claims promptly. A negative reputation involving a claim dispute with an insolvent carrier can damage its image.

In short, the environment is less predictable and more hostile for the reinsurer.

Involvement with a failed ceding company leads the reinsurer from the familiar world of private enterprise to the alien environment of government regulation, politics, and close public scrutiny, where all the rules seem to be turned on their head. With normal cedant/reinsurer relationships, the goal of both parties is to have a longstanding mutually profitable relationship. With insolvency, the goals diverge. The receiver is seeking generally to:

(1) fix the estate’s liabilities;
(2) marshal its assets; and,
(3) wind down the estate as promptly but as fairly as possible.

The reinsurer, on the other hand, is trying to become disentangled from the estate with the least damage in losses and expense costs.

The Reinsurer’s Silver Lining-Paying Less And Paying It Later

For the reinsurer, there can be a brighter side: lower settlements and delayed payments. These often are the advantages of a cedant’s failure. For many insolvencies, especially those with long tail exposures, it is certain the reinsurer would have paid more money more quickly if the company had survived. The ceding company’s failure generally throws a monkey wrench into the process, creating confusion and discouraging claimants from filing their claims in the first place or at least dampening their enthusiasm to pursue their claim.

Lower Payments.

Policyholder settlements with receivers are often lower than they would have been on an identical claim with a solvent company. Reinsurers, of course, benefit from this phenomenon.

Here are some of the reasons:

• Liquidations impose claim bar dates — in most states, 18 months or less after liquidation unless specially extended. Policyholders with long tail claims can find their claims have been barred before they were even asserted. When extensions are available, discouraged claimants don’t always apply for them.

• Even if they get past the bar date problem, insureds are not familiar with the protracted insolvency process and are, therefore, not as diligent or effective during the negotiations in maximizing their recovery and protecting their interests. Also, they may not invest sufficient time and effort to maximize their recoveries because they are doubtful they will ever recover much from the insolvency;

• Many large insureds abandon or ignore their claims against the estate completely, believing they would be throwing good money after bad in pursuing a small recovery in the insolvency court;

• Guarantee funds and receivers can play hardball in the negotiations with the policyholder, knowing threats of a bad faith claim are remote;

• In environmental and toxic tort claims, which can trigger many policies, policyholders ordinarily seek first to maximize recoveries from all solvent carriers and later seek discounted reimbursements from insolvents; and,

• In environmental and toxic tort claims, liquidators are not involved in costly coverage and defense litigation. Once it has been declared insolvent, all actions against the liquidated company are ordinarily stayed. (See Note 1 below) The cost of this litigation can be quite considerable.

This is not a one-way street though. There can be instances where the nsolvency itself may increase the amount of the reinsurer’s claims payments. For example, solvent insurers can at times resolve long-tail claims for less than the ultimate loss exposure by settling with the insured on a present value basis. The reinsurer may benefit from this lower settlement. (See note 2 below) policyholders are generally not willing to give any credit for the present value of money in negotiations with the insolvent since it will not pay the insured any part of a settled allowance until a court approved distribution from the estate is made (which can be many years in the future.) The reinsurer in this case may pay more on an identical loss because of the insolvency.

The reinsurer of an insolvent may also pay a higher amount more quickly, if the receiver estimates the ultimate value of the claims against the estate and demands immediate payment on these estimates from the reinsurer. Some states have provisions in their statutes that allow the receiver to do this. (See Note 3 below.)

The proposed Uniform Receivership Law (URL) also has a claim estimation provision with some limitations allowing what amounts to an arbitrated forced commutation. Reinsurers contend that these estimates can be unreliable and often are too high. (See note 4 below) They also argue that accelerating insurance recoveries breaches the fundamental terms of the agreement with the ceding company. On the other hand, claim estimation based on projections of past experience may understate the cost of late-developing claims. By “cutting off the tail” of long term liability policies, estimation may save reinsurers significant sums. (See Note 5 below.)

Delayed Payments.

Liquidation slows the entire claim evaluation and disposition process, frequently to a crawl, sometimes to what appears to be a standstill. There are instances of insurers taken over by receivers in the 1970’s, which are not yet, in the new millennium, finalized. (See note 6 below)

Reinsurers may benefit when the day of reckoning is postponed (or never reached.) The interest that a reinsurer can earn on years of postponed reimbursements can be significant. Several factors, unique to the insolvency of the company, impede the flow of money from the reinsurer to the cedant to the policyholder to the claimant. Here are some of the common ones:

• Many years can be spent just locating and organizing the records of the failed insurer. Insolvents’ accounts are often found by the receiver to be disordered, incomplete, kept in diverse places, or difficult to decipher. Disorganized records are often the reason why the company got into trouble in the first place, or else a consequence of the chaos that preceded its failure. With many of the original employees quickly leaving the insolvent, the receiver has a difficult time finding and reconstructing basic information, including insurance policies and reinsurance contracts.

• Unless appropriate financial and employment incentives are put in place, the receiver’s staff can slow the process, consciously or not. Faced with the prospect of losing their jobs once the estate is finalized, they may not be in a hurry to speed things along. They deserve to be given a financial or other good reason why a swift winding down of the estate is in their best professional and personal interest. Many estates have done this, but others have not.

• Policyholders often drag their heels in submitting timely and complete information to the receiver. Ordinarily, they are not acquainted with the receivership claim process, which includes completing a proof of claim and cooperating with the liquidator. They lose time just understanding what they must do to recover. Often may they become active only when they learn that the estate is going to pay an interim dividend or that the bar date is imminent.

• Reinsurers cause delays by scrutinizing settlements and coverage decisions more closely. Since the insolvent is no longer a business partner, the reinsurer is less likely to be overly accommodating, or to view a questionable claim with magnanimity.

• In the case of latent injury claims, which often trigger numerous policies, insureds usually first seek recovery from solvent carriers. Afterward, sometimes many years later, they may actively pursue their claim against the receivership, if they are not time barred. As the reinsurer of a very unprofitable insurance company it is, in some ways, a stroke of luck and good fortune that the cedant is declared insolvent. For the reinsurer, the ceding company’s insolvency tends to diminish the damaging effects of unprofitable underwriting.

Conclusion

The reinsurer’s difficulties with an insolvent cedant are well documented and easily understood. The benefits, meager as they sometimes are, can be overlooked or discounted. The reinsurer needs to accept the new, sometimes harsh, realities stemming from the insolvency of a cedant and develop a pragmatic and cost-effective exit plan.

Understanding why things are suddenly turned on their head is the first step towards these goals. The second step is to meet all obligations under the reinsurance contracts in this challenging new environment so that the situation does not go from bad to worse. Developing a close and supportive working relationship with the receiver’s claims operation will ensure that defendable claims are skillfully handled. Communicating and cooperating in general with the receiver makes good business sense.

ENDNOTES


1. For example see 215 ILCS 5/189 ”. . . The court may also restrain all persons, companies, and entities from bringing or further prosecuting all actions and proceedings at law or in equity or otherwise, whether in this State or elsewhere, against the company or its assets or property or the Director except insofar as those actions or proceedings arise in or are brought in the conservation, rehabilitation, or liquidation proceeding.”

2. The reinsurer may not benefit. The cedant could argue that its present value settlement should be shared with the reinsurer in the same ratio that the ultimate loss would have been shared in the absence of the settlement.

3. See for example in Illinois 215 ILCS 5/209(7); and in New Jersey see 8 Mealeys Lit. Rep.: Ins. Insolvency 13, at 4 (Dec. 2, 1996).

4. See Hall. Estimation of Claims and Acceleration of Reinsurance Recoverables: The Uniform Receivership Law. 10 Mealey’s Insolv. Rep. No. 17 at 16 (1999).

5. For a discussion of the prominent issues in claim estimations see Veed, Cutting the Gordian Knot: Long Tail Claims in Insurance Insolvencies. 34 Tort and Insurance Law Journal, No. 1, p. 167 (Fall 1998).

6. For example, Signal and Imperial in California were placed in liquidation in 1978. American Reserve in Illinois went into liquidation in 1979. These estates are still open.

Reinsurance Claim Handling in a Nutshell (Letter to a Reinsurance Friend)

Dear John,

So you took the plunge. You quit that stuffy old law firm and accepted a senior claims job at Total Reinsurance Company. Congratulations. I wanted to be among the first to wish you luck. When we spoke yesterday, you asked me to give you some suggestions on what to do in your new claim job at a big reinsurance company. I am flattered you asked and happy to oblige but I can only give you my two cents — you’ll have to judge things for yourself when you get there. After you have gotten your feet wet at the company, read this again and let me know how close to the mark I was.

First things first. Being a claim representative of a big reinsurer is fun. You will be exposed to a diversity of claims: everything from auto cases to medical malpractice to D&O claims to major property losses to environmental (asbestos, hazardous waste, etc.)Most of these claims will be large and complicated and will require your detailed analysis.

You will travel to many parts of the country and see how a wide variety of insurers and self-insureds handle their claims. Cedants will view you differently depending on the size of the company you visit. To the small companies, you will be an all-knowing visionary whose every word is inspired. To the large companies, you will be an annoying pest.

Keep in mind, also, that things are changing in the insurance and reinsurance world. The whole industry is consolidating into fewer and ever larger companies (think Berkshire Hathaway purchasing General Re and Munich Re acquiring American Re.) And now the line is blurring between insurance and reinsurance products. There are lots of reasons for this including cedants’ flight to quality and reinsurers’ need to achieve economies of scale. If they hired you at Total Re, I would say they really, really needed you. There are no extra bodies hanging around the offices of insurers or reinsurers anymore.

Second, at Total Re you will not be a claims person at all. Not really. They may call you that, but don’t believe it. You will not interview witnesses, photograph accident scenes, take statements, depose experts, or supervise counsel. The claim staff at the ceding company does all of those traditional claim tasks. Instead, at Total Re consider yourself part of underwriting, treaty production, actuarial, and accounting all at the same time with a sub-specialty in the claims field. Your true role at Total Re is to work within each of these departments and to bring to light the claims issues that affect these groups.

Let’s take them one by one.

1. Underwriting. Total Re’s goal is to make money reinsuring its cedants. It wants to pick the right companies and charge the right price. That is an underwriting function. To do this, the Total Re underwriting department will examine the business to be reinsured and structure a program. How the program is structured depends largely on the degree of risk that the underwriter sees in the transaction.

To weigh the risk, the underwriter will need to know, among other things, how well the cedant’s claim department shapes up in comparison with others. Does it have enough people? Are they competent? Do they do a good job in investigating, reserving and settling their cases? How quickly will they report claims to their reinsurer?

The Total Re underwriters are interested in these things because they affect the adequacy of the rate charged the ceding company. This is where you come in. The poorer the quality of the cedant’s claim handling, the higher the rate must be to make up for the riskiness this deficiency creates. The better the quality, the less risk and the lower the price can be. Of course, if the claim handling is extremely bad, no price will ever be adequate to cover the losses.

As a claim person, you can also shed light on the kinds of exposures the underwriters should expect on a specific book of business. Tell the Total Re underwriters about the types of claims that will arise, the trends in values, as well as important coverage issues. Anecdotes are instructive. Provide lots of examples. This will give them concrete knowledge and allow them to more profitably structure the reinsurance program.

If there are problems in the cedant’s claim department, you will need to make suggestions for improvement so that the cedant and Total Re can improve their bottom line.

At Total Re, you will really be a part of the Underwriting Department.

2. Production. To the ceding company, you are the day-to-day face of Total Re because of your periodic claim visits. This makes you an important part of the marketing department.

If you act professionally, competently and reliably, the cedant will tend to think of Total Re in the same way. Don’t you make a judgment about your auto carrier based on how they handle your claim? It is the same way with reinsurers, believe it or not.

Pay the claim promptly if it is warranted. Total Re’s business will grow only if it swiftly reimburses the cedant on valid claims. Most reinsurers generally require that the claim be paid within 5-7 business days after receipt of the claim. The cedant’s senior staff can get very nervous if their reinsurer is slow to pay on legitimate claims or comes up with spurious reasons why it will not pay.

From time to time you will have a question on whether you should pay a claim. Express your reservations long before the request for payment comes in, if possible. A difference of opinion on a single claim should not interfere with overall good relations between your companies.

Provide added value. This is a part of marketing. For example, you probably have seen more large complex cases than the cedants’ claim staff. Sharing your experience may prove useful to the cedant in handling a claim. But don’t be a know it all. The cedant’s claim staff usually knows a lot about their own business. Remember, also, that under the Follow the Fortunes clause in most reinsurance contracts, the cedant’s claims handlers generally have the last word in how the case is handled. All you can do and should do is make suggestions. The cedant’s claim staff can take it or leave it.

Total Re may have specialized departments to help its cedants with unique claims situations. These services will distinguish Total Re from the other reinsurers. Some examples of specialized claim services are a rehabilitation department, staff with considerable experience in large catastrophe property claims or a structured settlement department.

At Total Re, you will really be a part of the Marketing Department.

3. Actuarial. A lot of what you in do in claims is also what the actuarial group does: estimate the value of losses affecting your reinsurance contracts. The only difference is that you make estimates on claims one by one while the actuaries make estimates on claims — both reported and unreported — as a group.

As an honorary member of the actuarial department, you are interested in whether the cedant’s individual case reserves are timely and adequate. Your advice to the actuaries on these issues will affect how they interpret the loss statistics. If you report that a cedant’s claim staff is prompt and sensible in establishing and reporting their case reserves, the actuaries will feel more comfortable selecting the lower end of an estimate range. If the cedant is slow and unrealistic then the actuaries will opt for a higher estimate.

The actuarial department is also interested in whether there is a change in the company’s reserving approach. Changes in reserve methods could include speeding up or slowing down the posting of full, mature reserves. Unless they know about these changes, the actuaries will interpret a sudden increase or decrease in the reserves as new and significant trend when it may be nothing of the kind. Only you can discover and report to the actuaries what the claim department is doing in setting its reserves.

At Total Re, you will really be a part of the Actuarial Department.

4. Accounting. You will be called upon to review and communicate payment and collection problems between Total Re and its cedants. That is an accounting function. You may think that such tasks are not within your job description, but you will become a valuable resource for both parties in avoiding misunderstandings and acrimonious disputes.

On the one hand, the cedant will view you as a spokesperson for Total Re when querying the status of payment on outstanding claims. At the same time, Total Re may turn to you when they want a quick assessment of reinsurance accounting issues where a particular program’s underwriting is tied to claims paid or reserves posted.

At Total Re, you will really be a part of the Accounting Department.

5. Claims. If they insist on telling you that you are in the Claim Department, don’t fight it. You will in fact be doing some things that are commonly thought of as “claims” functions. For example, you will review coverage issues, set reserves, make claim-handling recommendations, and conduct audits. But remember how these activities fit into the bigger picture at Total Re. What you do directly impacts the company’s bottom line and don’t forget it. It may sound trite, but you need to communicate and work together with underwriting, production, actuarial and accounting.

Finally, you asked for some advice on what to do and what to look for on claim reviews (some call them audits, but that sounds like the IRS to me.) Of course, you are reviewing the claims in your capacity as an underwriter, marketer, actuary and reinsurance accountant — not really as a claim executive. During a visit with a cedant, there are 3 distinct activities underway:

(a) Re-analyzing allocations and coverage under reinsurance contracts.

There is sometimes wide latitude available to the cedant in judging whether a claim falls under a contract and how expenses are allocated. If this judgment is supportable and consistent with past coverage positions, then the reinsurer normally must go along with the decision. If it is not supportable, then an adjustment should be made in the amounts owed by the reinsurer. Reviewing the entire file gives a full picture of how these decisions were made.

(b) Establishing independent reserves on claims subject to the reinsurance contract.

Establishing reserves on reported and unreported claims during the claim reviews is often more accurate because the entire file is available as is the staff handling the case on a day to day basis. If you disagree with the ceded reserve, you will set an Additional Case Reserve (ACR) on the claim to make sure Total Re is adequately reserved. Also, the cedant’s claim staff can sometimes say in conversation what they would not write on paper so it is very important to discuss high exposure claims with the claim staff.

(c) Evaluating the quality of the ceding company’s overall claims operation.

All ceding companies are not created equal. To fully understand the quality of the cedant’s claim operation, there is no substitute for an onsite visit to the ceding company’s offices. Among other things you must review the timeliness and diligence of the cedant’s investigation; the promptness and adequacy of the reserves; the cedant’s attitude towards settlement (settle or go to trial); and, how quickly it reports claims to Total Re. If possible, conduct your review at a desk in the middle of the claim department. That way you have immediate access to the person handling the claim. More importantly, you can pick up vibes by seeing how the claim staff interacts and works. If the reinsured company does not want you to be among them, be suspicious. You might ask what they are trying to hide. Of course, it may be that they just don’t have any room for you and there is nothing at all to suspect.

You may deal largely with claim issues at Total Re, but you won’t really be a part of its Claim Department.

Well that’s it. Just remember you will be wearing many hats at Total Re including those of underwriting, marketing, actuarial and accounting and just a little bit of claims. Working in all of these departments simultaneously is a tall order (and you only get one paycheck)but I know you are up to the challenge.

Good luck. And don’t be a stranger.

Jack

Mark Twain's pessimism about war

Speaking about war in the book, The Mysterious Stranger, he said:

There has never been a just one, never an honorable one -- on the part of the instigator of the war. I can see a million years ahead, and this rule will never change in so many as half a dozen instances. The loud little handful -- as usual -- will shout for the war. The pulpit will -- warily and cautiously -- object -- at first; the great, big, dull bulk of the nation will rub its sleepy eyes and try to make out why there should be a war, and will say, earnestly and indignantly, "It is unjust and dishonorable, and there is no necessity for it." Then the handful will shout louder. A few fair men on the other side will argue and reason against the war with speech and pen, and at first will have a hearing and be applauded; but it will not last long; those others will outshout them, and presently the anti-war audiences will thin out and lose popularity. Before long you will see this curious thing: the speakers stoned from the platform, and free speech strangled by hordes of furious men who in their secret hearts are still at one with those stoned speakers -- as earlier -- but do not dare to say so. And now the whole nation -- pulpit and all -- will take up the war-cry, and shout itself hoarse, and mob any honest man who ventures to open his mouth; and presently such mouths will cease to open. Next the statesmen will invent cheap lies, putting the blame upon the nation that is attacked, and every man will be glad of those conscience-soothing falsities, and will diligently study them, and refuse to examine any refutations of them; and thus he will by and by convince himself that the war is just, and will thank God for the better sleep he enjoys after this process of grotesque self-deception.

George Orwell on Society and Writing

George Orwell, the pen name of Eric Arthur Blair, a social commentator born in 1903, is as relevant today as he was in the 1930’s and 1940’s. The turbulent eras that he lived though and commented on—the depression and the Second World War—were stormier than ours to say the least. But the same dynamics at play back then are alive and well today in the early 21st century. Nationalism. Shameless manipulation of language to sway the public. Simplistic appeals to ideology, fear or religion. All these were present in 1940 and like fossils preserved in amber, no, like Dorian Gray who never seems to grow old, all of these forces are with us today. Unless the human race undergoes a sweeping psychological makeover, a remote contingency in my view, these same factors will be with us for many generations to come. We need to learn to not to repeat our past mistakes.

People and nations sometimes behave like my mother did in her declining years. When she was older, say in her eighties, my mom’s memory began to fail her. I remember that I could tell her the same joke or funny story over and over again and it always delighted her. She laughed each time never knowing that she had heard that one before, the day before. Nations are like that. They never seem to remember that they already heard the one about nationalism or religious fundamentalism, or dangerous aliens before. It was a bad joke the first time around. But they keep listening, thinking that with this telling they will hear a real rib tickler. They won’t.

Briefly, Orwell believed that Chamberlain was an idiot and had gotten his position only because he was born into the right social class—the educated and well to do. He did not deliberately sell out the country in Munich when he gave Hitler the green light to go into the Sudetenland. But Chamberlain and his coupon clipping ilk probably did view Hitler as the safeguard against something far worse—Communism. And Communism, with its theoretical embrace of a class free society, would have been devastating to the moneyed tier in Britain.

In 1940, the upper class was, in Orwell’s view, obsolete, burnt out, and degenerate. Worse, they were ineffectual and incompetent. England could not survive with them in control. He viewed the war as an opportunity to rid them from the ruling class. He advocated that the ruling class be a meritocracy where class is not a factor.

In 1940 there were others in Britain beside the elite who may have looked, in Orwell’s view, somewhat kindly on Hitler.

In 1940, of course, the Nazis and the Russians had a non aggression pact in effect (soon to be cast aside by Hitler), so the Communists in England who were in sympathy with the Russians were not opposed to Hitler—yet.

Of course, there were a few brown shirt Nazis even in England. But they were such a minority that they were almost laughable and certainly not a factor. Orwell explains that the British are not a people to celebrate militarism and open displays of warmongering.

Finally, Orwell mentions Catholics as a group which might be well-disposed to Hitler. This group, of course was much larger than the number of Communists or brown shirts. Where it stood on Hitler would be of greater importance than the others. As far as I can tell, he did not explain the reason why he thought Catholics had a partiality for Nazism. I can guess that he thought Catholics, as a group, may have felt oppressed in England, or favored Hitler as a covert Catholic or maybe as a persecutor of the Jews (although I am not aware that British Catholics were particularly anti Semitic as, say, Poles apparently are).

He also wrote about the benefits of Socialism over Capitalism. He felt that industry should be taken over by the government; that incomes should have high and low limits; that India should gradually be separated from England. He saw the impending war as a catalyst from bringing on these changes. In retrospect, Orwell was gravely mistaken on Socialism. While unchecked Capitalism will lead to horrible injustices, unfettered Socialism can be just as dangerous.

It is remarkable that Orwell wrote some of his most perceptive essays while the bombs were still falling on London and he had no idea what the outcome of the war would be. He spoke with his own clear eye and perspective disregarding his own perilous circumstances. This is what he says about that.

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As I write, highly civilized human beings are flying overhead, trying to kill me.
They do not feel any enmity against me as an individual, nor I against them. They are ‘only doing their duty’, as the saying goes. Most of them, I have no doubt, are kind-hearted law-abiding men who would never dream of committing murder in private life. On the other hand, if one of them succeeds in blowing me to pieces with a well-placed bomb, he will never sleep any the worse for it. He is serving his country, which has the power to absolve him from evil.

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I began reading the book as I would any other, but I soon realized the language was so vivid, the comments so colorful, that I had to go back and underline selected sentences. They were so good that I wanted to be able to easily refer back to them. Here is just a short selection.

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For long past there had been in England an entirely functionless class, living on money that was invested they hardly knew where, the ’idle rich’, the people whose photographs you can look at in the Tatler and the Bystander, always supposing that you want to.

What is to be expected of them is not treachery, or physical cowardice, but stupidity, unconscious sabotage, an infallible instinct for doing the wrong thing.

They dealt with Fascism as the cavalry generals of 1914 dealt with the machine-guns - by ignoring it.

It is a fact that any rich man, unless he is a Jew, has less to fear from Fascism than from either Communism or democratic Socialism.

Even at this moment hundreds of thousands of men in England are being trained with the bayonet, a weapon entirely useless except for opening tins.

After 1918 there began to appear something that had never existed in England before: people of indeterminate social class. In 1910 every human being in these islands could be ‘placed’ in an instant by his clothes, manners and accent. That is no longer the case.

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Orwell’s relevance to today is in his pinpointing of the force that drives behavior: self interest. Find out what a person or group needs and you can predict their behavior in a given setting. Chamberlain wanted the status quo; the Communists wanted a classless society; the Nazis wanted their superior race to dominate (and maybe to feel that they weren’t such losers in the previous war). And so on. This is not a novel discovery to be sure. But one that one must constantly bear in mind when understanding why nations are acting they way they are.
On Language and Writing

Here is my favorite passage of George Orwell:

Political language is designed to make lies sound truthful and murder respectable, and to give an appearance of solidity to pure wind.

The inflated [literary] style itself is a kind of euphemism. A mass of Latin words falls upon the facts like soft snow, blurring the outline and covering up all the details. The great enemy of clear language is insincerity. When there is a gap between one's real and one's declared aims, one turns as it were instinctively to long words and exhausted idioms,…

Orwell wrote a short piece on effective writing. The following are some of the most valuable comments and suggestions that he made in it.

A. Dying metaphors. A newly invented metaphor assists thought by evoking a visual image, while on the other hand a metaphor which is technically "dead" (e.g. iron resolution ) has in effect reverted to being an ordinary word and can generally be used without loss of vividness.

B. Operators or verbal false limbs. These save the trouble of picking out appropriate verbs and nouns, and at the same time pad each sentence with extra syllables which give it an appearance of symmetry. Characteristic phrases are render inoperative, militate against, make contact with, be subjected to, give rise to, give grounds for, have the effect of, play a leading part (role) in, make itself felt, take effect, exhibit a tendency to, serve the purpose of, etc., etc.

C. Pretentious diction. Words like phenomenon, element, individual (as noun), objective, categorical, effective, virtual, basic, primary, promote, constitute, exhibit, exploit, utilize, eliminate, liquidate, are used to dress up a simple statement and give an air of scientific impartiality to biased judgments.

D. Meaningless words. In certain kinds of writing, particularly in art criticism and literary criticism, it is normal to come across long passages which are almost completely lacking in meaning. Words like romantic, plastic, values, human, dead, sentimental, natural, vitality, as used in art criticism, are strictly meaningless, in the sense that they not only do not point to any discoverable object, but are hardly ever expected to do so by the reader.

Now that I have made this catalogue of swindles and perversions, let me give another example of the kind of writing that they lead to. This time it must of its nature be an imaginary one. I am going to translate a passage of good English into modern English of the worst sort. Here is a well-known verse from Ecclesiastes:

I returned and saw under the sun, that the race is not to the swift, nor the battle to the strong, neither yet bread to the wise, nor yet riches to men of understanding, nor yet favour to men of skill; but time and chance happeneth to them all.

Here it is in modern English:

Objective considerations of contemporary phenomena compel the conclusion that success or failure in competitive activities exhibits no tendency to be commensurate with innate capacity, but that a considerable element of the unpredictable must invariably be taken into account.


A scrupulous writer, in every sentence that he writes, will ask himself at least four questions, thus:
1. What am I trying to say?
2. What words will express it?
3. What image or idiom will make it clearer?
4. Is this image fresh enough to have an effect?

And he will probably ask himself two more:
1. Could I put it more shortly?
2. Have I said anything that is avoidably ugly?

I think the following rules will cover most cases:
1. Never use a metaphor, simile, or other figure of speech which you are used to seeing in print.
2. Never us a long word where a short one will do.
3. If it is possible to cut a word out, always cut it out.
4. Never use the passive where you can use the active.
5. Never use a foreign phrase, a scientific word, or a jargon word if you can think of an everyday English equivalent.
6. Break any of these rules sooner than say anything outright barbarous.