This insurance policy was known as a Credit Default Swap and it literally swapped the bad credit rating of the CDO with the great credit rating of the big insurance company.
A credit default swap is an insurance contract between an insurance company or an investment bank and the owners of an interest bearing asset like bonds or mortgage backed securities.
ARONCZYK: David says they address these hypotheticals in part by baking the eventualities into their models, into their calculations, and setting aside credits as insurance for events like wildfires.
That's a situation where insurance from the government and the airline and the credit card won't really protect you, but additional travel insurance would.