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The God Clause and the Reinsurance Industry

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The God Clause and the Reinsurance Industry

The risk business can tell us a lot about catastrophes. Why don't we listen?

Bloomberg Businessweek ,

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What if the worst thing you can imagine is not the worst thing that can actually happen? Trouble for the reinsurance industry.

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Few people work directly with reinsurance, so it may seem an oddity. However, since reinsurers work at estimating the likelihood of disasters, and their work underpins insurance, they affect everyone. What reinsurance has and hasn’t been able to predict has gotten more complicated in this age of global terrorism and climate change which has far-reaching ramifications. getAbstract suggests this article to all grappling with the implications of global change, and, specifically, to readers seeking to understand risk.

Summary

Many people don’t know what reinsurance companies do. Unless you work for an insurance company, you would not deal with them. Reinsurers insure insurance companies against catastrophic events. This means that the reinsurance industry is deeply invested (literally) in anticipating not just “high frequency” disasters like fires and severe storms, but also threats from new quarters. Every year Lloyd’s of London issues a list of “Realistic Disaster Scenarios.” These range from an earthquake at “the New Madrid fault in the Mississippi Valley” to planes colliding in midair above an urban area. Despite this regular attempt to forecast potential danger, though, Lloyd’s ...

About the Author

Brendan Greeley is a staff writer for Bloomberg Businessweek.

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