Crop Insurance

            Governments tend to be very involved in supporting their country’s agriculture. In various countries, this intervention ranges from funding research programs and irrigation projects, setting stringent regulations and grading standards, managing supply, protecting use of certain names and geographic labelling, and even involvement in farm finance such as by providing credit to farmers. In

Glarus Fire and Swiss Re

            Growing populations, urbanization, and industrialization led to surging insurance needs in Europe in the 19th century. To meet this need, hundreds of new insurance companies were formed across the continent. However, these same trends also made insurance a riskier business. The growth meant that a factory or town burning down in 1860 could be

The Insurance Revolution

              Insurance was one of the first financial products to achieve a level of sophistication recognizable to practitioners today. In the Late Middle Ages, insurance was widely traded in Italian port cities and life annuities were sold across Europe. However, insurance requires a calculation of risk that is rarely straightforward in a world where information

Insurance and the Titanic

           The Titanic tested the insurance industry. Ships of its luxury and scale were novel, bringing into question the correct pricing for insurance coverage on such a ship. In the end, it seemed that underwriters underpriced the risk, since when the Titanic’s sister ship Olympic secured coverage for its next transatlantic crossing after Titanic’s sinking, the

Ulpian and Roman Annuities

           Life insurance contracts, life annuities, and an array of transactions relating to estates and inheritances are contingent on lifespan. It would make sense that some method of valuing these life-contingent transactions would have been formulated long ago, even in the absence of good demographic data. As it happens, life annuities were common in ancient Rome

The First Terrorism-Linked Bonds

           The first insurance companies were launched in the 18th century, the first reinsurance companies in the 19th, and the first insurance-linked securities in the 20th. This steady development in the insurance market helped make property and casualty insurance universally accessible and competitively priced. It has also reduced the riskiness of insurance operations, bringing stability and

Pool Re and Terrorism Insurance

             Insurance companies have decades or even centuries of experience insuring against many perils, from storms to fires. But some risks are harder to insure against than others. Some perils occur too infrequently to have high confidence in any calculated probability of occurrence. Others can cause extremely extensive damage when they do occur. Still other perils

Insurance for All

           The government in Germany is said to have created the first welfare state in the 19th century, built around social insurance schemes protecting against sickness, workplace accidents, and other hazards. In Britain, the government began building its own welfare state a few decades later, organizing it around principals of insurance as well. However, the British

The World Bank’s Pandemic Bonds

           Insurance works courtesy of the law of large numbers. Every year, some number of homes burn down and some proportion of cars crash and these events may be unpredictable to any one insured person. To an insurer though, the occurrence of such mishaps across their portfolios is actually quite predictable. However, insurers also have a

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