Systemic risk in the modern era
In the wake of an event like the
If they are successful at their business, they assess the risk of insuring a property and adjust the premium and payout accordingly. Properties are pooled so that the insurer faces systemic risk rather than specific risk from any individual property in its portfolio. However, this does not mean that the insurer will ignore specific risk when determining the premium of a policy. If, say, a property is in a zone where underbrush could fuel a wildfire, the insurance underwriter might require that an added risk premium be attached or that the property owner take certain measures to reduce the risk.
Specific risk exposure can be further reduced through diversification of the insurer's portfolio. If an insurer is inadequately diversified, its holdings can be wiped out by one or a few catastrophic events. Hurricane Andrew, a devastating Category 5 hurricane that hit southern
Adherents to the cult of climate catastrophism say climate change poses a systemic risk to insurers. They attribute severe fires, floods, and plagues to anthropogenic global warming. Unfortunately for them, there is one small problem with their reasoning, the
If climate cultists can push aside math to make their point, then I feel free to promote my own methodology through which insurers can measure novel systemic risk. My method utilizes the patented DIE (Diversity, Incompetence, Equity) scale, a 1–10 rating where a 10 signifies "
For example, my assessment of this video of LA Mayor Bass gives all of
Image: Free image, Pixabay license.
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