An Old Reinsurance Joke About the Next Asbestos, and Ostrich Irony
A friend let me know the following humor appeared this week on The Insurance Insider, along with some praise for Praedicat and its compilation of data on “the next asbestos.” I certainly join in both the joke and the praise for Praedicat, which I’ve been praising – in public – since 2014.
Ironically, the insurance industry keeps coming up short on asbestos reserves, much less “the next asbestos.” Interestingly, some insurers and other professionals rushed to buy our 2016 paper on asbestos science and law, but others avoid it like the plague. Likewise, some insurers love Praedicat but others not so much.
A cynic might think some insurers are rather like ostriches.
Here’s an old reinsurance joke for you:
A: “What’s the next asbestos?”
B: “I don’t know, what is the next asbestos?”
A: “It’s the old asbestos, but with 10x higher damages than you have reserved for!”
There are some pretty smart people out there, but to date modelling has been the preserve of those solely looking at the ‘P’ part of ‘P&C’.
And even then, that property cat modelling has been mostly backwards-looking, using historical storm track databases applied to today’s buildings and insured portfolios. Only the UK’s Met office has been brave or foolish enough to try and do long-range forward-looking weather forecasts for the hurricane season – with a wretched success rate to date.
The casualty modelling part of property and casualty has been largely confined to historical loss development analysis, even though we all know that at some point in the future there will come a day when we really should re-name the ‘P&C’ market the ‘C&P’.
So hats off to Praedicat, which has launched a forward-looking casualty modelling tool called Oortfolio. It has done work with Lloyd’s in the past, but today it has unveiled Swiss Re as its first customer and partner for the tool.
Mark Geoghegan, Managing Director, The Insurance Insider