Monday, December 04, 2006

NoKo Insurance (Big Time Fraud?)

Everyone's favorite whacky dictator has a problem (well, several, but this one is relevant to IB): he's strapped for cash, and running out of options (and money). Sure, he could sell weapons to terrorists, or continue to pump out counterfeit US currency.
But that's just small potatoes; the real bucks, as everyone knows, are in the insurance.
No, Kim hasn't (yet) gotten his Life & Health license (so far as we know, anyway); but he has (apparently) set up a pretty interesting reinsurance scheme:
Apparently, he's insuring much of his country's infrastructure, and then submitting major claims against those policies. If true, this is insurance fraud writ large, to the tune of potentially hundreds of millions of dollars.
Why should you care? After all, it's the reinsurers who take the hit, not us, right? Well, no: our own carriers offload much of their risk to these same reinsurers, who will now have to charge more to make up for the NK losses. A double whammy.
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