Edited By André Straus and Leonardo Caruana de las Cagigas
Despite being one of the main pillars of the insurance industry, reinsurance is little known by the general public and is rarely the focus of academic study. In this book, the authors – economic historians and experts in the field from across Europe and Japan – seek to address this by shedding light on one of the most globalized of all economic activities. In a clear and engaging manner, they reveal the history of reinsurance in both national and international contexts, aiming to illuminate this vital, but often overlooked, aspect of insurance.
The Creation of Complex Reinsurance Networks in Spain (1880-1940) (Pablo Gutiérrez González / Jerònia Pons Pons)
The Creation of Complex Reinsurance Networks in Spain (1880-1940)
Pablo Gutiérrez González & Jerònia Pons Pons
Despite its relative backwardness, the Spanish insurance industry made wide use of innovative devices developed in mature markets from the beginning of the First Globalisation. Management structures such as the agency system, actuarial elements such as mortality tables and financial instruments such as reinsurance served to change and modernise Spanish insurance during the following decades1. Specifically, reinsurance served as an especially useful device since insurance demand was growing in an environment of opening up to international markets, low regulatory requirements and a chronic lack of capital resources2. In fact, the 1869 legislation on joint-stock companies and the political stability from 1875←113 | 114→ converged with a lack of fiscal and financial regulations to create an environment that facilitated the development of insurance. As a result, during the following decades the Spanish insurance industry became increasingly complex, with different actors such as mutual societies and foreign and domestic companies, all utilising quite different reinsurance strategies3.
Reinsurance allowed companies to deal with increasing underwriting risks in the main branches by making more homogeneous risk portfolios and by reducing loss volatility4. Financial literature states that reinsurance helps companies to improve their market position by enhancing their underwriting capacity in spite of capital shortages5. Thus, in the case of Spain, domestic companies became competitive despite their low levels of capitalisation; foreign branches operating with minimum reserves could maximise the...
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