doing business with insurers that rely on securitization

[rmsnot]

Besides AM Best ratings, there are other indicators of how reliable and likely to pay claims a company is. In Florida, we have companies that receive ratings not from AM Best but some unknown rater. If a big hurricane hits, what is going to happen to these companies? They use reinsurance and now securitization to protect themselves. Is this enough?

More companies appear to use “securitization” (cat bonds and more) instead of buying reinsurance. Is there added risk involved?

Securitization may be good for investors in these securities (as a description of a new book by Alex Krutov Investing in Insurance Risk posted on Forbes appears to be saying and made me think about the implications for others). Is it good for policyholders? Does it take away from the ability of a producer to provide policyholders with fully informed advice on the reliability of their insurance company?

Are these things reflected in AM Best ratings that can be easily checked http://www3.ambest.com/ratings/default.asp? Does it matter? Is everything here about hurricane risk and policies for coastal areas? Hurricane coverage comes from a different source in Florida (not in other states though).

Is securitization a positive development for policyholders and agents?

[wlunday]

Sounds like a great question for the state insurance Commissioner. Also, might make a good continuing education topic...
Swymmer

[michga11]

bump. good read.