That old line, “The other guy is doing it, so we must as well,” spells trouble in any business, but none more so than insurance.

from Warren Buffett – Letter To Shareholders 2012 on Rap Genius

Meaning

Many financial services businesses have this problem — managers can be incented, through fees and bonuses, to take on business that someone with a true owner mentality would turn down.

The more distributed the control of a large financial services enterprise, the more likely this problem is to occur. Hence there is a real advantage to having a CEO like Buffett with total control and a large ownership stake.

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