Chip Merlin’s thoughts about the federal agenda of State Farm, Allstate and Nationwide versus that of the 350-member companies of the American Insurance Association make for interesting reading on a subject much in need of a broad-based public conversation – and, Chip even offers the kick-off.
It is amazing that there has not been more investigation and calls for transparency into the major personal lines insurance companies’ discussions and agreements which may reveal such a conspiracy. While anti-trust exemptions exist for insurance companies regarding sharing of loss data for rate making and other rate or form issues, there are no anti-trust exemptions for agreements that otherwise restrain trade and competition through collusion…
Given that Allstate and State Farm are underwriting fewer coastal risks where hurricanes hit, I think it is more than happenstance that each share a common political agenda to protect market share losses as they pull away from Coastal America and try to avoid financial losses that occur from hedging the catastrophe risk themselves.
With that introduction, I yield the rest of this post to Chip and those of you who wish to comment.
It is obvious that State Farm, Allstate, and Nationwide have agreed to promote a federal agenda to keep their smaller and newer competitors from taking over market share of their cherished automobile and other insurance businesses by lobbying the federal government to enact legislation to indirectly insure property these three companies consider too risky to insure themselves.
One of the insurance industry’s major trade, lobbying and propaganda organizations is the American Insurance Association. It has over 350 insurance companies as members. Conspicuously, State Farm, Allstate, and Nationwide are not members. The American Insurance Association is opposed to federal legislation which creates a federal catastrophe reinsurance plan, while Allstate, State Farm, and Nationwide lobby for such a program. The AIA web site states:
“Among the proposals of some policymakers are federal catastrophe funds (also known as “Cat Funds”). While those mechanisms may offer short-term rate relief, they also promote unwise and unsafe property development, and leave problematic cost-drivers for insurers and policyholders unresolved.”
In a press release opposing the Federal Catastrophe Legislation, the AIA states: Continue reading “Chip Merlin on State Farm’s, Allstate’s and Nationwide’s Concerted Agenda To Stop Competition And Insure Profits”