To Insurers, a Long, Free Ride Is Looking Risky (NYT): “Coverage [for brokerage houses] varies from policy to policy, but typically the insurers promise to cover up to $100 million for each customer, with no limit on the total number of customers. If a huge brokerage firm with millions of clients and hundreds of billions in client assets collapsed, the insurers say, the policies could bury them in an avalanche of claims. To be sure, all of the brokerage firms they insure have solid, seemingly invincible balance sheets, and only a tiny fraction of their accounts would not be adequately covered by the firm’s own assets and the $500,000 a head from the Securities Investors Protection Corporation. Those facts were true all along. What has rattled the insurance companies now, insurance brokers and experts say, are the aftereffects of the disaster at Enron and other recent corporate governance and accounting scandals.”
Posted by Mises.org News
