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>bypassing these centralized dinosaurs The reason they are centralized dinosaurs is to ensure they are large enough to cover claimants in the case of disasters
by hnnewguy 12y ago
>bypassing these centralized dinosaurs
The reason they are centralized dinosaurs is to ensure they are large enough to cover claimants in the case of disasters. They need to be large to mitigate risk. Even as large as they are, they sometimes still fail.
Insurance is pretty basic, unglamourous work. Do you think a system of insurance startups, going bankrupt every time there's a large series of claims, is the way to go?
- deleted 12y ago[deleted]
- lclarkmichalek 12y agoYou can be a small insurer and survive disasters. That's what the reinsurance market is for. Otherwise, local insurance companies would go bust every time there was a geographically localised disaster.
- hnnewguy 12y ago>That's what the reinsurance market is for The risk is still being off-loaded to massive reinsurance companies.
- lclarkmichalek 12y agoMaybe? More likely it's packaged up into a derivative product which can then be spread among any size of institution. There's nothing fundamental about the reinsurance market that requires massive companies; that's the genius of it.