In London’s financial district there is a massive building home to a famous financial market that handles risk unlike any other place in the world. The Lloyd’s of London insurance and reinsurance market has no limit on what can be insured. Insurance policies taken out at Lloyd’s include Brooke Shield’s and Tina Turner’s legs, Rolling Stones guitarist Keith Richards’ fingers, and singer Celine Dion’s vocal cords. Therefore, if Keith Richards ever broke a finger and could no longer play the tune to “Jumpin Jack Flash” or if Celine Dion’s vocal cords were ever damaged and she could no longer sing “My Heart Will Go On,” he or she would be paid millions of dollars in …show more content…
Even though the insurer lowers their risk, they have to pay a price and lose potential
future payments if the claim never has to be paid.
Insurance companies need reinsurance for a number of different reasons. One
reason for getting reinsurance is if an insurance company wants to take on a client’s
coverage, but the burden of taking on that risk is too great for that single company.
Individual companies are limited in the amount of business they can write by a variety of regulatory mechanisms intended to insure that the