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Reinsurance: The Invisible Insurers Published in The RHA Review, Vol. 5, No. 4, Third Quarter 1999
By: John T. Bogart |
As an underwriter trainee in the home office Special Accounts department of a major old-line insurance company back when the world and I were both young, I was dazzled by the array of household-name accounts that my employer was writing. I sat on underwriting meetings in which my seniors discussed the liability exposures of oil rigs, experimental pharmaceuticals, hazardous chemicals, firearms, flash frozen foods, automobiles, hospitals, and cosmetics. I was sent to our myriad underwriting sources to research vast construction projects and to calculate the area and depths of the water and the downstream exposures in the event of a dam collapse. I interviewed technical departments experts on the flashpoint of component parts of the proposed insured's products and was even allowed, on one occasion at least, to interview the proposed insured himself. My employers, I knew, asked all the right questions and possessed all of the necessary data and therefore could assume these tremendous risks, answerable to no one. But I noticed that a pause and hush would come over these final underwriting meetings when someone would invariably ask, "But what will the reinsurers say?" The discussions would then launch in a completely new direction as my mentors filled the air with unfamiliar terms such as "attachment point," "treaty exclusion," "facultative," ceding commission," etc. Their biggest concern seemed to be, "Will they agree?" Who, I wondered, were the "they" who could temporarily halt the rapid march toward a final quotation and jeopardize the elusive euphoria of a firm "order to bind." Having at that point, never been admitted into the august presence of reinsurers, I pictured them as sitting at vast mahogany desks in thickly carpeted offices in penthouse suites of midtown Manhattan towers, smoking Benson & Hedges cigarettes in ivory holders, deciding where they would lunch and which underwriters might be allowed to accompany them and have the honor of picking up the check.
John T. Bogart is an Insurance Expert witness & Consultant: High Hazard casualty & Property Insurance. CGL and Umbrellas. Liability - Unique forms & exposures. Excess & Surplus Lines. Reinsurance assumed & ceded. Duties of agents, brokers and underwriters. Bad Faith issues. Coverage interpretations. Environmental insurance. Insurance policy archeology. Professional liability.
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