Waylon Wong

And the story of how betting on natural disasters became a market, a big thriving market, really starts with this one person.

My name is Karen Clark.

People have actually called Karen an icon.

OK, so Karen might not have been a child genius, but she was way ahead of her time.

In grad school, when she was, what, 12, she studied how to run simulations on these cutting edge machines that people were calling computers.

That landed her a job at an insurance company where her bosses asked her to apply her skills to the problem of hurricanes.

Which is why your insurance company will actually buy insurance for itself.

Insurance for insurance companies is called reinsurance.

Most insurance companies will take out reinsurance policies to protect them in case of natural disasters like earthquakes or hurricanes.

OK, so back in the 1980s, while she was working for that insurance company, Karen was looking into this complicated system of insurance and reinsurance and re-reinsurance.

And she realized that when it came to major catastrophes like hurricanes, the whole market was still mostly operating based on guesswork.

But Karen's like, no, no, no, there's actually a smarter way to do this.

We can use computers to simulate thousands of different disaster scenarios, plug in data about things like how homes in an area are built and how much they'll cost to repair.

That'll give us a much clearer picture of the actual risks here.

And Karen is so convinced of this that she soon starts her own one-person company to build and license these computer models to the insurance industry.

And Karen gets this huge opportunity.

She gets a meeting with them to show off her hurricane model.

So she makes the pilgrimage to their London headquarters.

She flies across the pond, lugging her newfangled portable computer along with her.

The men at Lloyd's, they are skeptical.