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True about diversifying risk, but most brokers simply guard against the risk of a payout by… taking out an insurance policy from another broker.
by falsedan 9y ago
True 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?