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Many insurance industry people alive today still possess some Neanderthal broker ancestry, according to a landmark scientific study. The finding has surprised many insurance experts, as previous genetic evidence suggested the Neanderthal brokers, who died out in Eighties, made little or no contribution to our inheritance.
“Neanderthal brokers are not totally extinct, in some of us they live on - a little bit,” said Professor Ron Schamm of the Thikasser Planck Institute for Evolutionary Anthropology.
The most widely-accepted theory of modern broker origins - known as “Out of EC3” - holds that the ancestors of living brokers originated in the city of London some 200,000 years ago. A relatively small group of people then left the city to populate the rest of the insurance world between 50,000 and 60,000 years ago. While the Neanderthal genetic contribution - found in people from Europe, Asia and Oceania - appears to be small, this figure is higher than previous genetic analyses have suggested.
Professor Schamm, told RISKbitz: “In some ways [the study] confirms what we already knew, in that the Neanderthal brokers look like a separate line. But, of course, the really surprising thing for many of us is the implication that there has been some interbreeding between Neanderthal brokers and modern intermediaries in the past.”
The scientists are interested in discovering genes that distinguish modern intermediaries from Neanderthal brokers because they may have given the evolutionary line certain advantages over the course of evolution.
The most obvious differences were in physique: the muscular, stocky frames of
Neanderthal brokers contrast sharply with those of sleek modern intermediaries, who look more like consultants.
But it is likely there were other differences, in behaviour and lifestyle, for example. Neanderthal brokers lived mostly on red meat and oysters and communicated in a grunting language known as “baakhanda”. They spent the night in five star caves [are you sure about this? Ed] and by day wandered the canyons of the City demanding payments from everyone [this can’t be right surely? Ed]
Researchers had previously thought Monte Carlo was the region where male Neanderthal brokers and modern female brokers were most likely to have exchanged genes. The two types overlapped there for some 10,000 years. The authors do not rule out some interbreeding in Baden-Baden, but say it was not possible to detect this with present scientific methods.
Dr Schamm commented that the amount of Neanderthal broker DNA that has persisted in the genome seems high: “What it means is that any traits Neanderthal brokers had that might have been useful in later populations should still be here. Traits such as the ability to consume vast quantities of alcohol and a total lack of self-awareness or self respect.”
Officials at CHOPS, the committee advising the European Commission over broker disclosure, have rejected suggestions from some risk managers that tougher measures should be brought in to encourage greater transparency from brokers over remuneration.
The notorious Anti-Broker League (ABL), formed at the height of the contingent commissions row (Spritzergate), has vowed to bring in a number of measures, including waterboarding, hooding, and a ban on golf. “It’s the only language they understand,” said the leader of the ABL, a well known risk manager. “We’re tough on lack of transparency, tough on the causes of lack of transparency.”
A CHOPS official said that they totally rejected such extreme measures. “We think that this can be achieved perfectly well by asking brokers very nicely. Using torture methods such as forced starvation will never work,” said the official, in reference to the ABL’s alleged plan to reduce broker lunches from five courses to three.
Brokers have responded by pointing out that they are already disclosing vast amounts of information, such as who the insurance is placed with, and what the premium is.
“We have no problem being transparent. We just don’t want people to know how or what we are being paid by insurers,” said Geoffrey Larg-Brandy, president of The Institute of Multinational British Insurance Broking Entities (IMBIBE). “We think transparency is over-rated. We prefer opaque. Or frosted. Or some sort of nice net curtains. We are prepared to disclose everything as long as it isn’t prejudicial to our bank accounts.”
The CHOPS official said that they were pursuing a number of different options, including mandatory disclosure, customer agreed remuneration, or disclosure on request. “Some form of disclosure will be required of brokers. We very much hope that they will agree to one of the suggested disclosure regimes,” said the CHOPS official. “Failing that, we’ll apply electrodes to their knackers…”
Mega Broker Inc has surprised the market with its announcement that it will/not accept contingent commissions on (m)any placements for certain clients on some businesses provided by the firm's core and peripheral broking operations. In February, several insurance brokers reached an agreement with regulators to lift or retain the ban on contingent commissions in place on and off since 2005. Lifting or imposing the ban could boost or diminish the brokers' revenues and/or increase competition for business, analysts say, as insurance prices continue to go up and down.
It will also alter their administrative and compliance burden in some way and maybe level one end of the playing field with smaller brokers, which were/not subject to the earlier or later ban.
Mega Broker said its units Mega Agents and Mega Mina will accept contingent commissions while Mini Mega and Agent Mega Inc won’t touch them with a barge pole.
In addition, Mega Corp will continue to collect commissions and/or fees for services from insurers related to its core contingents operations if insurers insist on paying them.
Some brokers are at odds with Mega Broker’s announcement, however. Hamilton J Humbug IV, chairman of Mammoth Broker Inc told RISKbitz that total transparency is needed on certain aspects of the insurance transaction. “Like a high class hooker servicing a respectable attorney general we have to put the client first and provide total discretion when it is requested.”
Regulators and industry officials trying to start the New York Insurance Exchange are looking at a raft of incentives to enhance its appeal, according to insiders. In addition to introducing a 0% federal corporate tax to lure insurers away from Bermuda, the backers are also looking at sweeteners that target Lloyd’s.
For example, instead of employing Lloyd’s style waiters in red coats and funny hats, the NYIE will feature attractive young women in skimpy cheerleader style outfits to greet brokers and visitors.
But the NYIE also plans to impose a “fun” dress code on executives wishing to transact business in the exchange.
A spokesman said that the aim was to make the NYIE a typically New York alternative to Lloyd’s or Bermuda. “The problem with Lloyd’s is that it is too stuffy and grey. Bermuda, on the other hand, is sunny but boring,” the NYIE spokesman said.
“We noticed that Lloyd’s has its strict dress code of business suit and tie whereas Bermuda has those ridiculous shorts. That gave us the idea of a differentiating our dress code as well as our tax code,” the spokesman said.
Extending the concept of dress down Friday to cover every day of the week the dress code of the proposed NYIE will be based on Village People characters. Anyone entering the exchange to do business will have to dress either as a police officer, a native American chief, a cowboy, a biker, a construction worker or a military person.
“We think the combination of the cheerleaders greeting people on the steps and the Village People costumes will make NYIE the most popular place in the world to transact insurance business. We may not even need the tax break,” the spokesman said before being fired.
Reinsurance bosses in London said they were not feeling threatened by the move to form an insurance marketplace in the US, the biggest market for both domiciles. “Look here old chap, London has been the world centre of insurance for over 3,000 years and that’s not going to change overnight,” said Sir Norbert “Nobby” Johnson, CEO of Mocha Re. “London will always be the number one domicile for Mocha Re and the industry as a whole.”
On other pages: chancellor raises UK corporation tax to 30% p37; Mocha Re moves to Dublin p42; Lloyd’s moves to Bermuda p23; Transport strike leaves City empty; FSA plans move to Luxembourg p59.
The Global Institute of Reinsurance Thoughtleaders has warned that an influx of investment bankers is threatening the sector’s reputation as the second or indeed third choice of those wishing to work in the finance sector.
The Institute says that the global banking crisis, and the issue of bonuses, has altered the perception of the public and the media. “Bankers are now highly despised individuals, unable to walk the streets, and given to lying about their chosen profession, often referring to themselves as estate agents or tabloid journalists in order to avoid the vitriol,” said GIRT chairman Percival Serpluss.
According to Serpluss, this has meant that more and more bankers are looking to switch to reinsurance as a career choice. “In the past, reinsurance was at least third choice behind banking (boring but lucrative) and accountancy (lucrative but boring). Now, reinsurance (boring but underpaid) is becoming the first choice of people who don’t want to be social pariahs and outcasts in society,” said Serpluss. “This goes against the natural order of things and we were happy with the status quo. Who knows what will happen to the reinsurance business if it starts being run by ruthless, avaricious albeit bright, dynamic, forward-thinking people?”
He added, “Reinsurers are much loved and valued by the general public. These bankers should take advantage of their experience of being unloved and socially excluded. They should retrain as a professional where this has always been the norm. There’s always a shortage of reinsurance lawyers.”
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