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America, We Need to Have a Serious Talk: There’s Something Wrong with Reinsurance

America, We Need To Have a Serious Talk: There’s Something Wrong With Reinsurance
For those of you unfamiliar, “reinsurance” is defined by Marriam-Webster as “insurance by another insurer of all or a part of a risk previously assumed by an insurance company.”1. We have all heard about the big Insurance “Companies” today, or insurers, such as Nationwide Insurance, Farmers Insurance, AAA, Liberty Mutual; the list goes on. Do the names “Reinsurance Group of America”, “Swiss Re”, “Munich Re”, or “Everest Reinsurance” sound familiar to you? Unless you work in the insurance market, my guess is “probably not”. I am going to give you a breakdown of what a reinsurer is, the conundrum of capital requirements and risk management, how the system is challenged by the increase in natural disasters, the broader issues at play, as well as some solutions and trends we are seeing in the market today.
Fair warning: This post is very dry, educational, and strongly opinionated in nature. These opinions are my own and influenced by industry exposure.