Time And Distance Policy

These represent olde tyme reinsurance contracts, first set up by Lloyd's of London. The structure, seen as lacking in today's market, helped usher in a new market for finite reinsurance in the 1960s. So, in that way, think of them like the mini skirt and go-go boots of the financial world: good for the time, but not aging all that well.

The basic structure involved claims payments made on pre-arranged dates for pre-arranged sums. As a reinsurance structure, it lacked flexibility. Because the payments came on a fixed schedule, they didn't match up to what happened with actual claims. They didn't do enough to transfer risk in a real-world sort of way.