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Writing a Policy, But Don't Cap the Loss


JEast
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I believe Buffett has talked about never writing an insurance policy without having a cap on it.  You never want to have an unending run on a policy.

 

Not exactly, but the travel insurance companies in India have been writing policies in Rupee but paying in foreign currency like US or Euro dollars.  With the Rupee now down around 25% in the last several months, oops! Loss expenses now just went up 25% and could go higher.  It does not appear they were hedging currency exposure to account for such potentialities.

 

http://www.business-standard.com/article/finance/travel-insurance-segment-feels-pinch-of-rupee-fall-113090600118_1.html

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