Phabbyfundz
Active member
Reinsurance for catastrophic losses. The insurance industry is able to absorb the multi billion dollar losses caused by natural and man made disasters such as hurricanes, earthquakes and terrorist attacks because loss are spread among thousands of companies including catastrophe reinsurers who operate on a global basis.
Insurers ability and willingness to sell insurance fluctuates with the availability and cost of catastrophe reinsurance. After major disasters such as hurricane, Andrew and the world trade center terrorist attacks, the availability of catastrophe reinsurance becomes extremely limited. Claims deplete reinsurers capital and as a result companies are more selective in the type and amount of risks they assume. In addition, with available supply limited, price for reinsurance rise. This contributes to an overall increase in price for property insurance.
Insurers ability and willingness to sell insurance fluctuates with the availability and cost of catastrophe reinsurance. After major disasters such as hurricane, Andrew and the world trade center terrorist attacks, the availability of catastrophe reinsurance becomes extremely limited. Claims deplete reinsurers capital and as a result companies are more selective in the type and amount of risks they assume. In addition, with available supply limited, price for reinsurance rise. This contributes to an overall increase in price for property insurance.