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Comment by SmellTheGlove | Hacker News Reader

What will you do in a bad year when a couple of cats drive your loss ratio north of 110%? I imagine the answer to that is a big part of the regulatory challenge!

I wish you the best, I do like your goal. I spent almost 15 years from post-college to ~present in insurance before moving on recently to something else here in SF. Ping me if you ever need anything or just want to bullshit about the industry :)

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Awesome, I will - thanks!

Property insurance attritional losses are fairly predictable, and reinsurance is there to smooth out Catastrophe loss years; they'll be there to support us and bring our Loss Ratio back under control. So key is to charge enough to cover attritional (i.e. predictable) losses + reinsurance premiums.

But yes in those bad years where there's no UW profit, there's no dividend - everyone's contribution was needed.

If you're covering CAT risk 100% using reinsurers, you are at a competitive disadvantage compared to insurers who can cover some of that risk themselves...reinsurers have their own returns they look for.

That's true, but I've yet to see a primary insurer that doesn't use reinsurance.

It's not about using "reinsurance", it's about how much risk you are laying off to them. Large insurers don't insure "just the predictable losses" (unless they set up their own reinsurers) because it lowers their ROE too much to give reinsurers so much of the underlying risk.

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