Jorgovanka Tabaković: If not us, then who? If not now, when?

Speech by Dr Jorgovanka Tabaković, Governor of the National Bank of Serbia, at the opening of the Serbian Insurance Days 2023 conference, Zlatibor, 29 November 2023.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Slide 1: Dear friends,

It is my pleasure to welcome you again this year on behalf of myself and the National Bank of Serbia, and to wish you a successful seventh Serbian Insurance Days conference.

I will begin with a historical anecdote, primarily because of the importance of insurance, which, I fear, many of you are not fully aware of. This is not an unfounded assertion. Insurance is of paramount importance and it does not have competition, nor will it have it in the foreseable future, not matter how fast modern technologies develop. In contrast to banks, whose competitors come in the form of payment institutions, varous platforms, fintech companies and other innovations, where they have to fight for their clients and survival in the market, insurers don't have this problem. Insurance can only harvest the benefits of modern technologies to approach clients in a faster and easier way, and it has a kind of a monopoly that is not appreciated enough by everybody, I'm afraid. Having a licence to carry out insurance business in Serbia and being a member of executive or supervisory board is a rare privilege that will last – that is why you have to make an effort to keep the privilege you have well deserved. And don't ever complain that insurance is an over-regulated field – it's no different anywhere in the world. Insurance is the most regulated area, where the state has to help an imperfect market with its own hand, where the industry cannot regulate itself, nor leave everything to mere competition. That is why I will begin with an anecdote:

There is a Dutch painting illustrating Herodotus's story of the Judgment of Cambyses. The Persian judge Sisamnes had been flayed alive by King Cambyses as a punishment for corruption. The painting shows Sisamnes's son dispensing justice from his father's chair "upholstered with the flayed skin as a reminder that justice, comes, literally, with skin in the game". Many of you know this anecdote to originate from "Skin in the Game", a book by Nassim Nicholas Taleb, also author of the famous "Black Swan", which was eventually recognised by everyone.

Hence the warning:

Never trust a person with no skin in the game. Without it, fools and frauds will profit, and their mistakes will never come back to haunt them.

Insurance is a system that requires trust! Perhaps even more so than banking. The courage to offer something you are not ready to deliver on is selfish courage. Or no courage at all. Especially when you are risking other people's funds.

Mistakes are repeated because someone else pays the price. Should I be more straightforward?

The mistakes of members of executive and other boards are paid by the undertaking, shareholders, state as the owner...and the one who makes mistakes mostly goes unpunished.

Тhat's how it used to be.