Risk Prof provides some insights and useful links to theoretical models explaining insurance price increases resulting from Katrina, Rita and Wilma. Capacity constriction and costs of raising new capital suggest that existing insurers will pull back and build capital internally. At the same time, new capital is emerging in new reinsurers, some backed by hedge funds.
Though insurance consumers and their elected representatives are likely to be unhappy, this looks like the capitalist system at work. RiskProf : Explaining Price Increases Post-Katrina
Posted by dougsimpson at November 19, 2005 09:30 AM