Few people realize that in 1792 the New York Stock Exchange was established in lower New York City to service the financial investment needs of the insurance industry.' In time, however, the wealth generated by Wall Street far surpassed that of the insurance industry. Regrettably, until only recently the insurance industry lost sight of the fact that insurance risks can support the creation of financial capital in a global economy. Not surprisingly the wake up call for the insurance industry came from a string of natural catastrophes occurring over the last six years, whose costs dwarfed those previously incurred by insurers. In fact, as the accompanying graphs at the end of this article illustrate, the number of property catastrophes has fallen since the late 1970's from about 230 to 160, but the average industry insured loss per catastrophe has soared since 1980 from $28 million to $250 million. Consequently, the total insured catastrophe losses from hurricanes, earthquakes and other natural perils for the five year period ending 1995 have amounted to a staggering $4 billion, compared to $11 billion over the previous five year period.2 Moreover, predictions about the rising costs of property catastrophe losses are being given greater credibility primarily because of (i) the rising values of insured risks; (ii) higher population densities in catastrophe prone areas; and most importantly (iii) the new and sophisticated catastrophe loss modelling techniques, which vary somewhat in approach, but provide insurers and reinsurers with better estimates of the amount of the insured property loss they might sustain arising out of a specific catastrophic event.3