There is an image from this past week that has troubled my sleep: a huge wave, some 20 feet high, barrels toward a coastline. People stand in the shallow waters of the shore, paralyzed by what they see coming. The tsunami roars across the beach and a way of life comes to an end.
Those of us involved in insurance-related businesses are well versed in the intricacies of risk transfer. Businesses purchase insurance because they have to and because they do not want to shoulder the entire burden of their losses. But nowhere in our schemes, in the careful calculations of our actuaries, is there room for the scale of the catastrophe that took place this past week. Over 100,000 people are gone and many more are at risk. Entire communities have disappeared into the murky waters. Nature's awesome indifference has swept away everything, from indigenous populations to the tourists escaping the cold winds of North America and Europe. All have disappeared in a fierce rush of water that receded almost as quickly as it appeared.
I was scheduled to write about experience rating, the mechanism that aligns a company's workers compensation losses with its costs. And I will do this, but at this point it can certainly wait until next year. For the moment, as we all pause to look back on the year that is ending and look forward to the one that is beginning, I want to express the hope that mankind will truly come together in a generous and non-partisan manner to ease the burdens of the survivors and begin a rebuilding project of unprecedented scale.
Best wishes to all our readers for a peaceful and prosperous New Year!