On the face of it, insurance is viewed as banking’s boring, ugly relative. But looks can be deceiving. And bankers and insurers know insurers are beautiful on the inside, where it counts. Insurers collect money upfront (premiums) that they invest in stock markets for the benefit of shareholders, paying out customer claims as and when they arise. Their income is regular and fairly predictable, since premiums are paid monthly or annually. The business model is simple, but brilliant — even more so relative to countries where transactional banking is free. It is no accident that Warren Buffett’s Berkshire Hathaway has large holdings in insurance and reinsurance firms, or that insurance veteran Stephen Catlin recently raised $1.8bn from private equity funders for a new insurance venture, Convex. Convex plans to use technology to do everything from claims processing and finance to reporting and investments, according to the Financial Times. The founder of the Catlin Group, once the owne...

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