
Tort is technical and operational risk of insurers 277
recently by Berkshire. However, prior to 9/11 Warren Buffett, CEO of Berkshire, said
that when the current policy expired he was not going to renew it, because insurance
premiums have dropped significantly and the earthquake is not aware of that fact.
Buffet’s justification for insuring a mega-risk, like the California earthquake, has
been that, in a worst case scenario, the catastrophe would represent 1–2% of
Berkshire assets. But what company would insure a potential risk of awards and
settlements of $100 billion, which may represent all of its assets?
In a way fairly similar to the 2002 drill ...