Sunday’s New York Times Magazine is up, and Michael Lewis has penned the cover story on catastrophe insurance. Widely known for two recent books on sports (Moneyball and The Blind Side), Lewis got his start by writing Liar’s Poker on his experiences as a bond salesman in the 80s. With that background, he tackles the long-marginalized efforts to spread out the risk in catastrophes. In effect, these are people who sell insurance to insurance companies; while car insurance companies can trust that accident rates will remain relatively steady on a year-to-year basis, other forms of insurance are more prone to epic acts of natural destruction from events like hurricanes or earthquakes. John Seo, the protagonist of our tale, figures out just how likely and just how costly such events are, risking billions of dollars in the process.
The subject dovetails nicely with Malcolm Gladwell’s profile of Nassim Taleb, a guy who sought to do the same thing with catastrophes that were merely financial in nature. Taleb has since written The Black Swan on the commonness of catastrophes in general.
Tags: Money