The Insurance You Don't Think About

Matt is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

We are all very familiar with a wide variety of insurance that we run into every day: health insurance, auto insurance, homeowners insurance, etc. But there are a lot of insurers out there that take on some very specialized risks. Case in point: the insurance that Lloyd's and its syndicate members provided to the New York Road Runners Club for the New York City Marathon.

The Wall Street Journal writes:

At stake in negotiations among the running club, insurance broker Lloyd's and the members of its syndicate is the financial health of one of the country's foremost athletics clubs, as well as $15 million in nonrefundable entry fees that runners paid when they registered for the race, plus millions more paid in ticket sales and sponsorships. The race, originally scheduled for Sunday, Nov. 4, was canceled after superstorm Sandy pummeled the New York region on Oct. 29.

Why do I bring this up? For one, it's just interesting to think about the random and highly specialized things that are being insured as well as the challenges involved in pricing those risks.

But also it's a chance to point out that there are a lot of publicly-traded insurance companies that focus on specialty insurance, and they often fly under investors' radars. Berkshire Hathaway (NYSE: BRK-A)(NYSE: BRK-B) obviously doesn't fly under the radar, but some of its insurance operations (not GEICO) take on specialty risks. But on the more low-key tip though, Markel (NYSE: MKL) is one that many investors may not be familiar with (though there are a lot of Fools that are big fans of Markel), as are W.R. Berkley (NYSE: WRB) and Alleghany (NYSE: Y). Some of the specialty risks that these companies cover include insuring chiropractors, "equine-related risks," cash-in-transit carriers, airports, and yachts.

Insuring these specialty risks is a lot more complicated than underwriting a standard consumer-auto policy, but the companies that do it well -- and I posit that all four of the above do -- can deliver significantly for investors.

TMFKopp owns shares of Berkshire Hathaway. The Motley Fool owns shares of W.R. Berkley and Alleghany. Motley Fool newsletter services recommend Berkshire Hathaway and Markel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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