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Article: Finite insurance: What is the real problem?

Article from:
Canadian Underwriter
Article date:
November 1, 2005
Author:
Copyright

One of the basic difficulties in determining whether there is a real problem with finite reinsurance is that there is no clear difference between it and normal reinsurance. U.S. regulators are concerned insurance companies will use finite insurance as a means to smooth earnings and thereby cover up financial problems. But one of the difficulties in determining whether there is a real problem with finite reinsurance is the fact that all types of insurance and reinsurance are also intended to smooth their earnings and reduce volatility.

A number of insurance industry practices have recently been reviewed and criticized by New York state Attorney General Eliot Spitzer, as well as various U.S. ...

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