Insurance is a very special product. You pay and you pay and you pay premium dollars, often for your entire life. In return you only get a promise. A promise that if you ultimately have a covered claim, and you’re paid up, they must pay that claim. The problem is that they must have that money, for years and years, kept safely and invested legally in order to be able to pay your claim if they so choose. It’s that special relationship of trust that imposes on an insurance company an obligation of truthful financial reporting in their financial statements.
If you, too, consider insurance a very special product, as you read AIG CEO formerly headed up Allstate insurance company you will see how the industry’s conduct following Hurricane Katrina caused that special relationship of trust to become a deep sense of betrayal.
To many on the Gulf Coast, watching AIG chief executive officer Ed Liddy talk about the sanctity of contracts in defending the award of $220 million in bonuses to employees at the embattled insurer was an ironic moment.
If only Liddy held that same view of contractual obligations to policyholders after Hurricane Katrina when he was at the helm of Allstate, Louisiana’s second largest insurer.
“How about that?” quipped Bob Hunter, a New Orleans native who is director of insurance at the Consumer Federation of America and the author of a 2007 study documenting the decline of claims payout ratios at Allstate during Liddy’s tenure. “He’s always disregarded contracts to maximize profits.”
Liddy was appointed by the federal government in September to run AIG when the ailing insurer got its first installment of taxpayer bailout money, which now totals $170 billion.
Before caving to pressure on Wednesday and saying that he would ask those who received more than $100,000 in bonuses to return half of the money, Liddy argued that the money needed to stay where it was because contracts are sacrosanct.
That Liddy was forced to cave in to pressure is eye for an eye– justice to policyholders pressured to settle for less coverage than they purchased. Many had to fight for even that; and, sadly, some still are. Continue reading “that special relationship of trust and a deep sense of betrayal”
Congressman Gene Taylor
U.S. House of Representatives
Fourth District of Mississippi
2269 Rayburn HOB
Washington, DC 20515
Fax (202) 225-7074
For Immediate Release Contact: Ana Maria Rosato
March 19, 2009 (202) 253-1308
Reps. Defazio, Taylor Defend Taxpayers from Further
AIG and Insurance Industry Greed
Introduce legislation to repeal insurance industry’s antitrust exemption
WASHINGTON, DC—U.S. Congressmen Peter DeFazio (D-Ore.) and Gene Taylor (D-Miss.) today introduced legislation to remove the federal antitrust exemption from the insurance industry. This legislation is particularly important in light of the abuses by American Insurance Group (AIG), operating as if they were above the law. In fact, the current insurance exemption from antitrust laws gave AIG a free pass to become “too big to fail,” and now the U.S taxpayers are on the hook to bail them out or risk even further turmoil in an already fragile economy. This legislation would close that exemption.
“The fact that the insurance industry is exempt from federal anti-trust laws is outrageous. Shouldn’t the $170 billion bailout of AIG be the third and final strike to the “business as usual” attitude toward the insurance industry? We cannot tolerate these rampant abuses of the system at a massive cost to tax payers,” DeFazio said. “AIG was gambling with people’s life savings and lost it all to speculative and shady transactions and contributed to the current crisis. We must insure this never happens again.”
“Why is anyone surprised?” Taylor said. “Insurance companies believe that they are above the law. When it comes to the federal laws, they are. After Hurricane Katrina, insurance companies took advantage of the lack of federal oversight to bill the National Flood Insurance Program for wind damage. Taxpayers also paid for FEMA trailers, home repair grants, subsidized loans, and tax deductions for property damage that insurance should have covered.”. Continue reading “Breaking: Gene Taylor Introduces Legislation to Repeal Big Insurance”
Folks the story of the treatment of Doctor Borg by LSBME has the potential to become bigger than Perdigao. And who filed one of the LSBME complaints against Dr Borg? Why it was Great-West Health Care (an insurance company) after “Dr. Borg had lodged his own complaint against GW with Louisiana Insurance Commissioner for perceived improprieties in GW’s reimbursement practices.”
So we have the good Doc at the mercy of an investigator who was carrying on an illicit affair with his lawyer while this case was open, among other wild happenings and events. I literally can’t do this justice in the small amount of time I have available now outside of the day job right now. Luckily for all of us KATC TV sat down with the Doctors Borg in a story that aired last night. While we await the video report here is the teaser from channel 3:
A Lafayette doctor has closed the doors to his business after being told he can’t practice for two years.
Doctor Walter Borg has been suspended by the Louisiana State Board of Medical Examiners.
According to his website, he is a Yale trained endocrinologist who has authored more than 20 scientific articles in medical journals. Continue reading “Attention all life forms at Starship LSBME: Resistance is Futile…..(Updated)”
Wednesday’s Docket for Association Casualty Ins. Co., et. al. v. Allstate Ins. Co., et. al had just two items – one an amended page 29 in the Plaintiff’s List of Exhibits and the other an Order Directing Verdit, Adopting Bench Opinion and Dismissing Complaint issued by US District Judge Keith Starrett.
This cause came on for trial on March 3, 2009, before the Court and a jury of ten. Both sides announced ready…Testimony was taken and evidence presented for eleven days. Following the completion of the Plaintiff’s case, a Motion for Directed Verdict was made by the Defendants.
The Court, in an oral bench opinion, granted Defendants’ Motion for Directed Verdict. The Court does hereby find that the Motion for Directed Verdict should be and is hereby sustained and incorporates herein by reference the bench opinion delivered this date stating the reasons and findings of the Court. This case is finally dismissed with prejudice.
Ironically, Time online was putting reinsurance under the Big Top in The Next AIG Scandal: Continue reading “Windpool circus shuts down – just as Big Top goes up”