For tourists, september on the Côte d'Azur is a time for soaking up the last rays of summer and for gambling at Monte Carlo's famous casino. For executives in the insurance industry, however, it's a time for serious business. Every fall, the city that is synonymous with chance becomes the world capital for people who hate to take chances.
At the Rendez-vous de Septembre each year, representatives of the world's insurance and reinsurance companies gather for one week to assess global market conditions and the catastrophes that might occur in the coming year. Over cocktails at the Café de Paris and on yachts in Fontvieille Harbor, they bargain to cover portfolios of risk, such as shares in the California earthquake market or the East Coast hurricane market.
Complexity theorist Stuart Kauffman studies how systems composed of many small parts coalesce spontaneously into organized units. "The theory ties together many things," he says. "If you squint a little, you have the feeling that something similar is happening in the biosphere and the econosphere."
Roger Jones, cofounder of the consulting and software-development firm Complexica Inc., traveled to Monte Carlo last September to offer his considerable expertise at calculating catastrophic risk. Jones's background is unusual for the world of insurance. He worked for 17 years as a physicist and computer scientist at the Los Alamos National Laboratory before heeding the siren call of a loosely affiliated group of scientists in nearby Santa Fe who call themselves complexity theorists. This new breed of scientist builds elaborate computer models to simulate the dynamics of complex systems as diverse as cities, rain forests, and the stock market. Since 1997 Jones has been developing a software program called Insurance World, which uses complexity theory to simulate the entire industry. "Insurance is the industry of surprise," he says. "And complexity is the science of surprise."
