Structural Problems and Diagnostic Diversity 1960–1980
Structural Problems and Diagnostic Diversity 1960–1980
While overall the economy boomed after the Second World War, reinsurance increasingly found itself challenged by the sudden increase in insured risks. Traditional reinsurance participated proportionally in the insurers aggregated risk portfolios, paying a percentage of overall claims. Motor business especially was becoming technically unprofitable. Losses were compensated by writing more new business and by considerable returns on investments. A second challenge came with new and more complex risks such as airplanes, oil tankers, and so on, which were difficult to assess. Reinsurers gradually shifted their business model to cover peak risks on a so-called ‘excess loss’ basis. The lack of loss experience with unknown risks lead the industry to look for ways of cooperating more effectively through meetings such as the Monte Carlo Rendez-Vous, and through heavy investment in risk intelligence.
Keywords: proportional reinsurance, excess loss, industry cooperation, risk intelligence
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