Doesn’t sound like insurance although CDI might think otherwise. That said, hjow boring of a bet-is there an EQ in your zip code in a certain time frame.
There is a line between insurance and gambling. In the spectrum of insurance coverages, policies of indemnity are in the middle of the spectrum. As you move towards the gambling line you find parametric products. They are not promises of indemnity (make the insured whole) but they promise a set amount of liquidated damages if the insured suffers loss upon the happening of an event. The potential product in this article does not require loss. This is gambling.
I’ve sold insurance, and traded weather derivatives. It seems to me that this product is clearly not insurance — but it could have benefits for people who stand to lose if there is an earthquake (even if they are not direct homeowners). It may be a good hedge for types of economic loss that could occur when a quake hits. The website does not have details but it seems to me that proceeds could be taxable as gains in some circumstances, unlike indemnity-based loss claims payments.
I see it as a sort of deductible supplement. The interesting thing to me is to see if they are regulated and rated the same as standard insurance companies. What is their surplus after a 250 year shake event.
SwissRe has a really good primer video on this very thing. Certainly, there will be differences between a sophisticated commercial client and the regular consumer. I can see, though, that this could provide some financial relief (emphasis on some) to subscribers.
This does not look at all like standard insurance. Are they self insuring these exposures? Is there actually going to be an insurance policy? What paper are they using? Who is the reinsurance company?
Just asking………..
We all know these policies will be purchased (for the most part)as an income producer for policy holders and not a dime will go into and repairs, only pockets.
The kicker is that those with mortgages will have the mortgage holder on any settlements issued. Just try to cash those proceeds and see what the mortgage holder positions will be!
Doesn’t sound like insurance although CDI might think otherwise. That said, hjow boring of a bet-is there an EQ in your zip code in a certain time frame.
There is a line between insurance and gambling. In the spectrum of insurance coverages, policies of indemnity are in the middle of the spectrum. As you move towards the gambling line you find parametric products. They are not promises of indemnity (make the insured whole) but they promise a set amount of liquidated damages if the insured suffers loss upon the happening of an event. The potential product in this article does not require loss. This is gambling.
I’ve sold insurance, and traded weather derivatives. It seems to me that this product is clearly not insurance — but it could have benefits for people who stand to lose if there is an earthquake (even if they are not direct homeowners). It may be a good hedge for types of economic loss that could occur when a quake hits. The website does not have details but it seems to me that proceeds could be taxable as gains in some circumstances, unlike indemnity-based loss claims payments.
I see it as a sort of deductible supplement. The interesting thing to me is to see if they are regulated and rated the same as standard insurance companies. What is their surplus after a 250 year shake event.
SwissRe has a really good primer video on this very thing. Certainly, there will be differences between a sophisticated commercial client and the regular consumer. I can see, though, that this could provide some financial relief (emphasis on some) to subscribers.
https://corporatesolutions.swissre.com/innovative_risk/parametric/parametric.html
This does not look at all like standard insurance. Are they self insuring these exposures? Is there actually going to be an insurance policy? What paper are they using? Who is the reinsurance company?
Just asking………..
This scheme should be regulated by the gaming commission, not the CDI
We all know these policies will be purchased (for the most part)as an income producer for policy holders and not a dime will go into and repairs, only pockets.
The kicker is that those with mortgages will have the mortgage holder on any settlements issued. Just try to cash those proceeds and see what the mortgage holder positions will be!