In the 1980s, my office was three doors from the New York Insurance Exchange at the corner of William Street and Fulton. It was a broker's dream, since a room filled with syndicate underwriters was within walking distance. Having worked at Lloyd's earlier in my career, I recognized the importance of face-to-face insurance negotiations. Governor David A. Paterson of New York has made a wise decision in announcing plans to create an international insurance exchange, modeled on Lloyd's of London. New York has always been a financial center, and hedge funds can certainly capitalize insurance syndicates.
The lessons learned from the 1980s New York Insurance Exchange must be taken into consideration. Priced properly and adequately, the insurance risk can produce an underwriting profit. The cost of insurance products sold must be commensurate with the risk taken. The Lloyd's model can be duplicated with the concept of pricing freedom and coverage flexibility. Technology of today provides the global insurance environment necessary to have an international insurance marketplace. Producers of insurance business would have the necessary financial resources to develop risks all over the world.
The exchange will need dedicated, insurance-experienced individuals to make this all happen. New York City has the financial resources to make it happen under the proper guidance of the Governor.
When do we begin?
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