When I was 17 years old I got my first full time job in the commercial insurance industry in the city. I was first a claims assistant then an underwriting assistant for a re-insurance firm and my job was to process massive money transactions on the computer, a terrifying machine that took up my entire desk and made alarming noises if I pressed a wrong key.
The way re-insurance works is a bit like the way bookies operate. Insurance firms who insure billion pound risks would go bankrupt if they sustained a total loss. So they cover sums up to a certain amount themselves, and broker the rest with different re-insurance firms in chunk sums of exposure in excess of that first amount, called x/s layers. The risk is spread around many firms. It's a big bucks industry on a parallel with investment banking.
One day my boss, Nick, a dynamic man not easily shaken began shouting and ranting at the top of his voice. He was swiftly joined by senior staff and the company director, it was clear something terrible had happened. At my corner desk, I sat behind glass with my monstrous computer and watched an unusual drama unfold in front of me until I was called to bring coffee into the company directors office. Nick looked sick. I took him a coffee and put an amaretti biscuit on the side.
The Piper Alpha was on fire off the coast of Scotland and Nick had underwritten a huge x/s layer of the risk for it. He’d just found out roughly how much we were liable for. It was a devastating amount. The rising death toll and the horrific manner of those deaths were devastating to us too. This was our loss now.
Offshore oil rigs are hugely tough expensive structures dealing with unthinkable pressures in hostile natural environments, safety measures and shut downs are vastly expensive, and though they don’t often go very wrong, I learned that day that when they do, the extreme forces, once out of control will always make for an unsalvageable disaster. The oil world stood mute, their worst nightmare. The insurance sector reeled, their biggest loss.
Nobody in the city discounted the human cost.