Insure Corporate Earnings? Bad Idea

America's corporate culture is in good shape, as the stock market will testify. There's a healthy focus on the bottom line, an emphasis on designing hot new products, a drive to use the Internet, and a global perspective. But every once in a while something truly wacky spins out of the corporate ether. Earnings insurance is surely one of them.

Insurance companies, it appears, are selling what one calls Enterprise Earnings Protection Insurance, which promises to cover any operating earnings shortfall caused by events beyond management's control. So if Brazil unexpectedly devalues, you're protected. La Nina disrupting the weather? It's O.K. Interest rates suddenly spike? Don't worry. Be happy.

Now, no one likes volatility, and taking risks, is, well, risky. But that's what managers are paid to do. Earnings insurance takes the accountability out of management. It separates performance and pay. And it can lull executives into sins of omission and commission. Everyone knows this, but the temptation to try and lock in the future remains.

So we suggest a few new insurance products. Employees, of course, should be able to protect against layoffs. Kids should get insurance against failing to get into Harvard (think of all tHose lost future earnings). And how about inheritance insurance for boomers whose parents do take it all with them? Then there's global warming insurance, divorce insurance.... You get the idea.

Risks are part of life and certainly part of business. People get paid well in America for taking them, and the economy does well for having them. Pass this fad by.