The limits of insurability

It is clear that the 11 September terrorist attacks have led to a shift in conceptions of the sheer magnitude of a potential loss. The losses involved extraordinary cumulative consequences. According to the international insurance think tank, the Geneva Association, the concern is no more to know the probable maximum loss but to evaluate the possible maximum loss as well. The Association warns that the risk does not end with the often arbitrary cut-off point of the normal distribution curve. But that, at the very end of the distributional function, there lie risks that go beyond the capacity of private risk solutions. Patrick Liedtke, secretary general of the Association, argues in the introduction to the Associations most recent report, Insurance and September 11 - One year after, that the ultimate uninsurable risk has to be borne by society as insurance can only operate within the limits of insurability.