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Archived stories from 2011

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New cat models could mean reinsurance losses

A leading reinsurance executive has warned that the new catastrophe models coming into the market could radically alter the very nature of reinsurance. Sir Norbert "Nobby" Johnson, Chairman and Chief Claret Officer (CCO) of Mocha Re, said the new models showed that reinsurers could face losses from catastrophes.

(Is this the right model? - Ed)

"It's a bit of a shocker to be honest," said Sir Norbert. "Who'd have thought that reinsurers would face losses from catastrophes? I guess this is what you call one of those new-fangled ?emerging risk' thingies that my underwriters are always on about. Could cost us a lot of money. Apparently these catastrophes mean loads of losses."

A bemused, and tired and emotional, Sir Nobby said he had always assumed that they excluded catastrophes as Acts of God. "Now it turns out that not only are we liable for catastrophes, but the amounts could be quite large according to these new models," he slurred.

He added incoherently, "Not good for the industry but shouldn't be too bad for us. We only have hurricane and typhoon exposures, and I can't imagine you get too many of those. We've also got a fair bit of European windstorm and flood, but how bad can it be? I remember last summer it was a bit rainy for a few days in Tuscany, but nothing to spoil the holiday. And the year before it was a bit windy with the old Mistral at Chez Nob in Provence, but nothing to write home about."

The latest updated, recalibrated, and generally tinkered with, model from catastrophe modelling firm, "We're All Going To Die, Inc." has been designed to scare the hell out of people and to extract more money from reinsurers. It shows that Mocha Re would go out of business five times over there is more than one tropical storm in the Caribbean region this year. "Fingers crossed, eh?" said Sir Nobbly Johnson.


Other news from Sep 2011
Travelating the Wave of Insurability
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