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This is probably part of the problem. If the insurance company doesn't have enough knowledge or data on beekeeping, they'll need to charge higher premiums to o
by appleiigs 9y ago
This is probably part of the problem. If the insurance company doesn't have enough knowledge or data on beekeeping, they'll need to charge higher premiums to offset the risk of the unknown.
Also, my understanding of insurance is that there needs to be enough beekeepers that are buying insurance out there to spread the risk around.
- rahimnathwani 9y ago"there needs to be enough beekeepers that are buying insurance out there to spread the risk around" That's not the case. The ones bearing the risk (insurance companies or reinsurers) need to diversify their risks overall but they don't need to do this within risk types. If you put aside the scale economies of doing the calculations, an insurer would have less overall risk (by which I mean variability in outcomes) if they were to insure one beekeeper, one driver, one baker etc. No need to have a large beekeeper market from a risk perspective. Maybe from an underwriting efficiency perspective, though.
- falsedan 9y agoTrue about diversifying risk, but most brokers simply guard against the risk of a payout by… taking out an insurance policy from another broker.
- rahimnathwani 9y agoBrokers don't bear the risk. Insurers and reinsurers (and Lloyd's syndicates) bear the risk. Brokers are agents; they aren't a principal in the insurance contract.
- falsedan 9y agoYeah, that’s why they reinsure with another syndicate, like I said.
- rahimnathwani 9y agoNo. Brokers don't ever carry the risk. So there is no risk for them to reinsure.
- falsedan 9y agoI don’t follow. I think brokers have enormous risks of valid claims needing to be paid out, which they hedge by taking out insurance themselves. You seem to be saying the same thing, while claiming that you are saying something else. Could you please try to restate your point in a way that might be clearer to me?