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Comment by rdtwo | Hacker News Reader

If the entire industry is exposed to the same risk and all get blown out then everyone gets a bailout or a pass on paying. That’s a feature not a bug

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Exactly, these are companies in business to make a profit not to provide a societal benefit. They all benefit from regulation of margins and common model/pricing, "everybody wins" except the customers.

Without the insurance and reinsurance industry, we’d be a lot worse off.

Most of the world doesn't have a Health Insurance industry (of US size and cost) and they have better outcomes with lower pricing. That doesn't mean there isn't an insurance industry in those places, it's just smaller, more properly regulated, and less profitable.

Insurance and reinsurance are highly regulated businesses, where firms have to hold reserves commensurate with the risk they are taking. While the models have limitations, they are good enough to evaluate capital requirement.

In the last 20 years, investors have become a welcome source of risk capital which was driven by (a) the increasing need of insurance coverage relative to existing loss-paying capacity within the system (I.e. Need for extra capital to support the growing market) and (b) the fact that insurers and reinsurers seek to diversify their own insurance coverage, By minimizing credit risk.

And if climate change continues the course... does not bode well current society. Doomsday scenarios are always painted with grand events. With this homogeneity a mid size event could cause a economic domino effect.

The risk models are updated with new science and current risk data on a regular basis, but yes, climate risk is a worry to the industry. The models do allow for climate risk scenarios e.g. by tweaking the frequency/severity of land-falling hurricanes/cyclones etc.

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