of paper moons and cardboard seas – first “the scheme” now State Farm reveals “the scam”

Say, it’s only a paper moon
Sailing over a cardboard sea
But it wouldn’t be make-believe
If you believed in me

It’s a Barnum and Bailey world
Just as phony as it can be
But it wouldn’t be make-believe
If you believed in me

State Farm’s decision to withdraw from Florida adds rich context for “the scheme.  Take a look at  the scamreported in the Miami Herald.

As part of State Farm Florida’s plan to stop writing property casualty insurance in the state, the company must move about 161,000 auto insurance policies from an affiliated company that sells homeowners coverage nationwide but not in Florida.

The shift is State Farm’s attempt to comply with a state law that prohibits an insurance company or an affiliate from selling auto insurance in Florida if doesn’t offer homeowners coverage here as well.

State Farm Fire & Casualty, a national subsidiary of State Farm Mutual, sells auto insurance nationwide and has about 161,000 auto policies in Florida.  It also offers homeowners coverage, except in a few coastal states including Florida.

Drivers covered by State Farm Fire will be offered policies by State Farm Mutual Insurance, the parent company for both State Farm Fire & Casualty and State Farm Florida.

State Farm Mutual doesn’t sell homeowners coverage in any state.

That’s right, State Farm Mutual is a shell – pick that one and you’ll find the money that could keep State Farm Florida from going under.

… when a wager for money is made…[a shell game becomes]… a confidence trick used to perpetrate fraud.   In confidence trick slang, this famous swindle is referred to as a short-con because it is quick and easy to pull off.

Pick another, however, and you’ll find State Farm scamming its agents. Continue reading “of paper moons and cardboard seas – first “the scheme” now State Farm reveals “the scam””

Our “about” page has always been very popular. Here is a supplement (Updated)

We’ve been asked a few times “exactly who we were” on Yahoo Allstate and our about page is always getting hits, especially lately. Here is a supplement:


Nowdy is of course Daisy Duke.
Rick and Johnny are Bo and Luke.
Steve is Cooter Davenport
Mr CLS is the General Lee
And I’m Uncle Jesse

Any suggestions for Boss Hogg, Sheriff Coltrane, and Deputies Enos and Cletus?


Allstate’s financial shenanigans hit the press: Deferred Tax Assets, That’s Allstate’s Stand….

Given the current financial mess that resulted from unsound and ill advised financial practices my total amazement at certain of the state insurance regulators for allowing insurance companies to count such silly things as deferred income taxes in their capital computations is mind boggling. Anyone else remember the industry meme the past 6 months repeated by paid insurance industry shills like Robert Hartwig of the Insurance disInformation Institute that this was a bank problem and that insurers were financially strong? Financially strong enterprises don’t spend time getting regulatory blessing to cook their books. In fact I’ll go a step further and publicly advise what I’m telling my paying clients, If your bank or insurer counts silly things like their net deferred tax asset as capital, run don’t walk for the door. Simply put it means they are in severe financial distress. In Allstate’s case details have emerged in the national media as to the extent of their problem. We begin at the WaPo:

Allstate, the big insurer, last week declared that despite unprecedented trouble in the markets, it remains financially strong.

But tucked deep inside a company report is evidence that Allstate changed its bookkeeping last year in ways that improve its financial appearance.

One accounting change added $347 million. Another delivered a year-end boost of $365 million.

Allstate’s actions illustrate a broader risk to investors, policyholders and people looking for insurance. Insurers have been asking regulators to let them operate with thinner financial cushions or to pad those cushions with assets they could not otherwise count. For anyone trying to assess the companies’ financial strength, the changes can cloud the picture. That could make it harder for people to make sound decisions when buying policies or annuities to protect their families.

This next blurb caused me to shake my head, in the small business world such slack is rarely cut a borrower or small town bank that’s insolvent but then again the guys and gals in small business don’t have armies of high priced lobbyist or revolving door employment arrangements with these state regulators: Continue reading “Allstate’s financial shenanigans hit the press: Deferred Tax Assets, That’s Allstate’s Stand….”