Another solution is to increase premium income, and in a world of crashing satellites and Web servers, insurance companies can always find another risk to cover. How many of these niches can grow from gimmicks to major markets remains to be seen, but insurance companies are determined to find out. For several years Centre Solutions has been writing policies that insure the residual value on auto leasing deals - guaranteeing, for instance, that the value of a fleet of Toyotas would remain above a certain level when their leases expired. Now Centre Solutions chief executive David Wasserman is studying the possibility of insuring key business variables for other industries, like hotel occupancy rates for lodging companies. The policy is meant to protect shareholders from earnings volatility.
Insurance companies can take a very much longer view.
But the risks of these policies remain unclear. Though the push into exotics is just a few years old, there have already been casualties. The group struck one deal in which filmmakers lined up a distribution contract covering a large proportion of their production costs, and the insurers agreed to underwrite the remaining portion. But when some of the movies bombed, the insurers had to pay. Holistic insurers hope to convince clients that companies' risks should be viewed, and insured, as a whole.