Insurance voices on natural catastrophes, the risk management business

A little insurance industry propaganda in the Insurance Journal: Munich Re's Webinar on Thursday - 2008 Natural Catastrophes - presented a detailed analysis of the increasing number of weather related events that concern both primary carriers and reinsurers. It also gave preeminent insurance guru, Dr. Robert P. Hartwig, president of the Insurance Information Institute, a chance to describe the differences - point by point - between the banks and the insurance industry that put the financial crisis in a much needed perspective.

… Hartwig ticked off a number of points as proof that the insurance industry differs greatly from the banks. This means that insurers continue to:
-- Pay claims (whereas 25 banks have gone under)
-- Renew existing policies (banks are reducing and eliminating lines of credit)
-- Write new policies (banks are turning away people who want or need to borrow)
-- Develop new products (banks are scaling back the products they offer)

In short, said Hartwig, "the insurance markets, unlike banking, are operating normally. This includes global reinsurance markets. The basic function of insurance - the orderly transfer of risk from client to insurer - continues uninterrupted."

…Hartwig closed with a warning that the 2009 hurricane season will probably be as bad as 2008 with an above average number of 14 named storms predicted. He also pointed out that both Florida and New York alone have just under $2 trillion of "insured coastal exposure," making future "mega-losses" almost inevitable….

Hurricane Katrina, August 26, 2005. NOAA