The reinsurance industry has heretofore quietly avoided the limelight which would otherwise be accorded to heroic individuals in the aftermath of major disasters, either man-made or natural. Instead, this credit has been awarded to their clients, retail insurance companies, saved from going broke, by the forward planning of Reinsurers.
The-reinsurance industry is not perfect, it usually at works correctly assessing potential liabilities. Reinsurers pride themselves in actuarial predictive analysis -- once they know an actual unforeseen disaster can occur.
It was the re-insurers who in the wake of Hurricane Katrina in 2005, and the collapse of the US Army Corps of Engineers' dikes, silenced the Louisiana local retail insurance industry, which had begun denying claims from flood victims.
Correctly seeing the reputation of the reinsurance industry at risk, reinsurers saved the retail insurance companies’ reputation. Local CEOs had given orders to welch on coverage by telling agents and claims adjusters that wind damage was at fault, when flood insurance was paid for; or water damage was wind damage.
Angry clients of retail insurance companies were outraged. For 3 weeks, they hammered their insurance companies with complaints, providing photos of the ridiculousness of the lies being told to their faces. Having lost everything, this betrayal hit deep and hard.
Finally, the reinsurance companies spoke out publicly telling local insurance companies to stop tearing the basic premise of coverage apart, destroying the industry during hours of worldwide coverage each night, and to shut up because the money would be there in six weeks.
Six weeks later, to the day, the reinsurers delivered the cash as $36-billion in checks that were paid out to retail customers of medical, health, life, property, casualty, crop, errors & omissions, and even pet insurers.
The media carried the message from the reinsurance industry, that local CEOs hadn’t got the memo from their reinsurers. The media damage was severe and on-going until the money got there. Reinsurers delivered.
Government ineptitude and corruption delivered toxic trailers and sheltering at sports stadiums. Convoys of Home Depot and Loew’s delivery trucks headed into New Orleans. One of our Board members sent teenagers from school in California to rescue the history of jazz from the Musicians Federation Hall.
Americans, and responsible industries, such as reinsurance, deliver stability, along with their message of caring.
The need to spread risk is elemental to humanity. We live in an imperfect world where disasters, global, regional, and personal take place regularly. Politicians seized on this failure of character of local insurers, by promising $100-billion in aid. No mention was made when the taxpayers' money would arrive.
After 5 years, the politicians had made good on 20% of what they had promised. $10B was paid to people, and $10B to the Army Corps of Engineers to rebuild their dikes with the same lack of caring that made them fail to begin with.
Disaster can strike at any time, as Larry Mann said.
As of yet, no American city has experienced the city-killing potential of Hydrofluoric Acid (HFA), used routinely in 1/3rd of these obsolete gasoline refineries, such as the Torrance Refinery. Modern refineries are built using liquid sulfuric acid catalyst processes, which vaporize at 560 degrees. In contrast, HFA vaporizes at 67.1F to 73 degrees, room temperature. A ruptured 55,000 gallon tank would kill and poison an entire American city.
The vulnerability from multiple causes, earthquake, terrorist attack, accident, to the huge 55,000-gallon hydrofluoric acid (HFA) tanks in 49 refineries in 19 major cities and suburbs in America, and 24 more in rural towns, remains a threat every day. Terrorist planners have known about these vulnerabilities for 16 years, while all levels of governing have dithered pretending to do a job of making sure infrastructure is resilient. Oil comporations have simply refused to upgrade, pleading poverty.
Reinsurers didn’t prepare for a tsunami in Malaysia, but were ready for Fukashima. They had gathered funds, although they hadn’t examined the coastal placement of nuclear reactors. The reinsurance industry began to be more suspicious of industrial claims that all will be well with their normal procedures, as they continue to account for the possibility of pollution disasters that kill their customers.