The Future of Global Reinsurance

Graciela Chichilnisky

MPRA Paper from University Library of Munich, Germany

Abstract: To provide a map to the future, we need a realistic appraisal of how we got where we are. This is the story of how humans have hedged risks. There are two basic and distinct approaches: statistical and economical. The former is typical of the insurance industry; the latter typifies the securities industry. Both are needed to manage today's catastrophic risks. Neither alone will do. I will show below how a combination of both leads to efficient outcomes, and is the way to be the future. Hedging unknown catastrophic risks requires a blend of skills from the securities and the insurance industries. By tapping large and liquid capital markets, reinsurers will be better able to deal with correlated, catastrophic risks. At the end of the intelligent customized use of derivatives and technology will separate the winners from the losers.

Keywords: hedging; hedge risk; reinsurance; catastrophe; catastrophic risks; securitization; environmental risks; global finance; catastrophe bundles; pricing (search for similar items in EconPapers)
JEL-codes: E44 G22 Q51 (search for similar items in EconPapers)
Date: 1996
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Citations: View citations in EconPapers (1)

Published in Global Reinsurance North American Special (1996): pp. 67-71

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:8334

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