Natural disasters and life insurance?

Question

lets say a huge earthquake hit.. uh.. NYC

there are.. lets say 10000 casualties... wont the life insurance companies be.. kinda ... screwed?... thats a lot of money they have to give out...

what happens if a natural disaster hits?

Answer 1

Natural disasters are already planned for in the rates.

Muslim disasters are not.

Our insurance companies are, themselves, insured.  That is, they do not carry the risk alone.  If one company has too much on the line, they re-insure the excess amount.

A natural disaster can be covered.  A Muslim disaster is another matter.   They may strike many cities at the same time.  Not good.

Answer 2

Not even WWII was a large enough event to upset the life insurance companies.  

Even in the event that a large insurer were to issue 10,000 policies in NYC and nowhere else, then have to pay out, the insurer would either have the reserves in place OR a reinsurance treaty to cover something that damaging to themselves. Even if the insurer goes into insolvency, other insurers in NY State would step forward and pay claims (a captive company agreement).

You can worry about something else.

Answer 3

They already know this could happen.  What you described is the need for geographic diversification.  The good news is that you don't have to worry about it because many more people die in isolated events each year than from mass events, no matter how big the news story is.

Answer 4

its no different than 9-11

incredible amounts of $ were paid out to the victims families

the cost was recovered by increasing yours and my insurance policy amounts

Answer 5

the life insurance companies pay is what.

natural disaster is a covered peril.

not to worry -- they're really very, very good at making a profit anyway.