October 2023, Amplified – Sam Bankman-Fraud, Tort Reform and Open-Ended Liability

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Michael Waitze worked in Global Finance for more than 20 years, employed by firms like Citigroup, Morgan Stanley and Goldman Sachs, primarily in Tokyo.  Michael lived and worked in Tokyo from February 1990 until December 2011.  Michael always maintained a particular focus on how technology could be used to make businesses more efficient and to drive P/L growth. Michael is a leader in the digital media space, building one of the biggest and fastest-growing podcast listener bases in the region.  His AsiaTechPodcast.com show has listeners in more than 130 countries and his company, Michael Waitze Media produces some of Asia’s most popular podcasts.

Theresa Blissing is a seasoned insurance professional with a strong background in operational roles with insurers, innovation consulting and academic research and the author of the #1 best-selling book The Future of Insurance, Volume IV. Asia Rising. She started her insurance career in 2004 when she joined Italian insurer Generali in Frankfurt, Germany. In 2015, fascinated by the potential of new technologies and their impact on the insurance industry, she decided to delve into a new challenge and pursue a master's program with a research component, focusing her study on the adoption of big data in the Southeast Asian insurance industry. During that time, Theresa also transitioned her career to management consulting. She worked with a range of consulting firms and started her own consulting and research practice, Accelerating Insurance. In 2019, Theresa co-founded the Asia InsurTech Podcast to bring Asia’s insurance success stories to a global audience. Currently based in New York, Theresa continues to push the boundaries of insurance innovation and has launched a new global podcast – InsurTech Amplified.

Guest
David Gritz

David Gritz is an InsurTech community leader, public speaker, and InsurTech advisor. He has been featured in recognized Insurance media including Carrier Management, Digital Insurance, IIR, AM Best TV, and the Re/Image Podcast. David is the co-founder of InsurTech NY, the largest InsurTech community in the NY metro area. David also serves as a strategic advisor to high-growth InsurTechs to help them go from concept to scale. Previously David has served as the Director of Innovation for the Silicon Valley Insurance Accelerator (SVIA) and has led product at Zero, a behavioral safety focused InsurTech acquired by EverestRe. He holds a J.D. from the Mitchell Hamline School of Law and business and industrial engineering degrees from Lehigh University.

Bryan Falchuk is the Founder and Managing Partner of Insurance Evolution Partners, which advises carriers and their partners on how to navigate an evolving industry facing disruption and change. He is also the President & CEO of Insurance industry trade group, PLRB, that is dedicated to helping adjusters to make expert decisions on Property and Liability claims. Bryan spent 20+ years in the insurance industry, including serving as Head of Claims for Hiscox USA and leading Growth for insurtech communications solution, Hi Marley. Bryan has also held leadership roles in corporate strategy, operations and distribution at carriers like Liberty Mutual and Beazley. He was a consultant in McKinsey & Company’s insurance practice and is on the advisory boards of several startups focused on the insurance industry. Bryan is a best-selling author and public speaker, including several TEDx Talks. His best-selling book series, The Future of Insurance, shares case studies of legacy and startup carriers overcoming the barriers to change we all face in the industry and working together to innovate to help Insurance move forward and evolve.

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In the most recent episode of “This Month, Amplified”, we welcomed Bryan Falchuk⁠ to the show along with the regular crew of Theresa Blissing and David Gritz⁠.

We delved into some very interesting topics surrounding liability and insurance, ranging from the ongoing trial of Sam Bankman-Fried to the implications of Johnson & Johnson’s bankruptcy case. These conversations shed light on some key insights that can help us better understand the current state of liability and insurance in today’s world.

1. The Challenge of Crypto Liability The trial of Sam Bankman-Fried, co-founder of FTX, highlights the risks and challenges associated with the crypto industry. FTX grew rapidly and became a leading crypto exchange and trading platform. However, during a volatile period in the crypto market, FTX suffered significant losses and resorted to using customers’ funds to try to trade out of their losses. This rarely ends well.

2. Differentiating Crypto and Blockchain It is essential to differentiate between cryptocurrencies like Bitcoin and blockchain technology. While cryptocurrencies have gained attention as speculative investments, blockchain technology holds promise for various applications both in and out of finance. Blockchain’s potential in areas like data sovereignty and creating a single source of truth is significant.

However, negative perceptions of crypto, fueled by incidents like the FTX case and the lack of distinction between crypto and blockchain, can hinder the adoption of blockchain technology in insurance. It may require a generation of leadership turnover and clearer understanding to regain trust and explore the full potential of blockchain.

3. Central Bank Digital Currencies (CBDCs) The rise of central bank digital currencies (CBDCs) poses both opportunities and concerns. CBDCs can offer more efficient transactions and better traceability. However, privacy and control issues arise when central banks have access to every transaction. The potential for abuse of power and loss of financial privacy is a significant concern.

CBDCs also prompt discussions about the insurability of digital currencies and the need for better custody solutions. Stablecoins, which are pegged to fiat currencies, may offer a more viable form of digital currency for everyday transactions. These stablecoins would require robust custody mechanisms and insurance coverage to ensure investor protection.

4. Implications for Liability and Insurance The ongoing Johnson & Johnson talc powder lawsuits raise important questions about liability and insurance. Traditionally, companies facing significant legal liabilities would separate the affected division and file for bankruptcy to limit liability. However, recent developments in the Johnson & Johnson case challenge this strategy. Rulings that liability could extend to the parent company, could potentially expose the entire enterprise to claims.

This case has broader implications for product liability and insurance. It could impact underwriting decisions, capacity, reinsurance pricing, and the overall availability of coverage. The uncertainty surrounding such liabilities could contribute to a hard market in the casualty insurance space.

5. Need for Tort Reform The increasing prevalence of lawsuits and the rising costs associated with liability claims point to the need for tort reform. The current system allows for the exploitation of legal loopholes, enabling some individuals and law firms to profit at the expense of others. Tort reform, including setting caps on liability, could help create a more balanced and fair legal landscape.

However, striking the right balance between protecting individuals’ rights and preventing frivolous lawsuits is crucial. Reforms should aim to address genuine grievances while discouraging opportunistic litigation.

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