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Author: tengen Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 39864  
Subject: Lloyd's of London Solution Date: 10/8/2004 11:17 PM
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I read an article in the Sept. 18th Economist detailing some changes going on at the famous insurance operation (not sure exactly what to call it). A couple of things I found very interesting. First, the article comments on the tendancy of insurers to make poor underwriting decisions in the name of keeping (or winning) market share. To quote Warren Buffet, it is "difficult for able, hard driving professionals to curb their urge to prevail over competitors". Sounds a bit like hockey clubs making stupid contract offers in order to win the cup.

The second item is the solution Lloyd's is introducing to address these urges, which is to require syndicates to submit their business plans for the upcoming year to a "franchise performance director", who apparently has the power to reject them if they are too loosy goosy.

As I was reading about this, it struck me as a potential basis for a solution to the NHL labour issue that avoids having a hard salary cap yet prevents owners from making decisions that will send them into bankrupcy. It would have to be combined with other measures that have already been proposed such as revenue sharing, changes to salary arbitration, qualifying offers, etc. However, it might offer a way for the NHL and the NHLPA to compromise, something that seems impossible based on their current negotiating positions.
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