The Logic of Reinsurance Capital?

Seldom does one come across the conflicting logics of capital versus humanity than this article in the RG today. If I’m reading it correctly, there are those in the industry who are hoping for a major disaster/catastrophe in order to reverse a threat to profit. The threat to profit rates is due to competition, saturating supply and thus leading to a fall in reinsurance rates.  capitalist altar According to the analysis, a lot of the increased competition is only able to do so through new entrants valuing risk too cheaply ‘in the pursuit of market share’. A major disaster/catastrophe would, by this logic, expose those new entrants with lower underwriting standards – and thus less able to withstand the losses from paying out in reaction to a major disaster/catastrophe – thus culling the reinsurance ecosystem in a survival of the fittest manner.  Those more able to withstand such a major disaster would then be able to capitalise on this, maximising their profit. No mention seems to be made of the human or environmental tragedy that such a major disaster/catastrophe would involve.  Simply the cold pure market logic of how to maximise profit.

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