Let them eat cake
-Marie Antoinette, who supposedly uttered the phrase during one of the famines that occurred in France during the reign of her husband Louis XVI.
Human nature never changes, only the people change, the pockets change, the suckers and the manipulators change, the wars change, the disasters change, the technology changes – but the market never changes. How can it? People never change and peope drive the market, not reason, not economics and certainly not logic. It is human emotions that drive the market, as they do most other things on this planet.
-Richard Smitten, The Amazing Life of Jesse Livermore World’s Greatest Stock Trader
Emotions must be understood and harnessed before successful speculation is possible:
- Greed – is a human emotion in all people, defined by Webster’s dictionary as: the excessive desire for acquiring and possessing. A desire for more than one needs or deserves. We do not know the orgins of greed, all we know is that it exists in every person.
- ……but hope, like its stock market cousins, ignorance, greed and fear distort reason.
-Jesse Livermore, From his trading manual
Mr. Praline: I’m sorry, I have a cold. I wish to make a complaint!
Owner: We’re closin’ for lunch.
Mr. Praline: Never mind that, my lad. I wish to complain about this parrot what I purchased not half an hour ago from this very boutique.
Owner: Oh yes, the, uh, the Norwegian Blue…What’s,uh…What’s wrong with it?
Mr. Praline: I’ll tell you what’s wrong with it, my lad. ‘E’s dead, that’s what’s wrong with it!
Owner: No, no, ‘e’s uh,…he’s resting.
Mr. Praline: Look, matey, I know a dead parrot when I see one, and I’m looking at one right now.
Owner: No no he’s not dead, he’s, he’s restin’! Remarkable bird, the Norwegian Blue, idn’it, ay? Beautiful plumage!
Mr. Praline: The plumage don’t enter into it. It’s stone dead.
Owner: Nononono, no, no! ‘E’s resting! …
-Monty Python’s Flying Circus Season 1 – Episode 08
I was reminded of all those quotes when I read the National Underwriter’ cover story from their May 26th issue that was authored by Sam Friedman that ran under the lede “Insurers Can Polish Their Image While Boosting Bottom Line“. Sam, whose blog was one of our original blogroll links here at Slabbed, felt compelled to author a companion peice on his blog that ran under the post title “Time for Some Tough Love on the Industry’s Image” no doubt fearing backlash from the insurance industry readers that support his trade journal. Both pieces left me stunned in how disconnected from reality Sam has become, his critical reasoning no doubt clouded by the revenue generated from the industry by his trade magazine. But before we analyze Sam’s column and blog entry we need to backtrack to last year and the posts we did on Sam’s indignation with the award winning Bloomberg story that detailed unscrupulous claims practices by insurers, “The Insurance Hoax“.
Sam called the work a “hatchet job” and did his best to torpedo it’s chances of winning the Deadline Club award for which it was nominated. He couldn’t be everywhere at once though and the cream truly does rise to the top so the Bloomberg piece, along with Becky Mowbray’s insurance reporting for the Times Picayune won awards from even more prestegiouos journalism trade groups than the Deadline club.
Sam was still steamed, especially after Dean Starkman at the Columbia Journalism Review subjected the Insurance Hoax to “the Audit” and found that the piece was indeed factually based, no doubt explaining it’s wide acceptance among professional journalists. Sam however, was having none of it prefering to remain in denial. So while I at the time I admired Sam’s passion we also got a peek at the partisan Sam, the one who Journalistic skills are clouded by the monetary realities of runnig a trade journal. One comment left on Sam’s original blog entry on the Insurance Hoax nailed it dead on, just like Monte Pyton’s dead parrot skit:
Do a consumer survey, or simply talk to your relatives and neighbors, for goodness sake! Ask them if they felt whether their insurer paid what was owed them. What more “proof” do you need?
Of course what I’ve found doing Slabbed is in the insurance equation consumers don’t count except for the expectation we regularily pay our premiums so I guess I should not have been stunned by Sam puff pieces on industry tough love for the May 26th NU. Sam concludes the industry needs is a better PR effort, ostensibly to convince people we should be happy when the Good Neighbor shafts their insureds after a disaster even going so far as to repeatedly suggest the industry fund a weekly TV show depicting the heroic insurance adjuster who spreads joy and happiness to those who have lost their possession to disaster. I’ve frankly never seen a bigger fluff piece in my life but I’ll let Sam speak for himself.
So why is it that the public dislikes and distrusts insurers? It’s pretty simple:
• Insurers are big, deep-pocket targets.
• The business of insurance is complicated and misunderstood by most.
• Carriers keep shooting themselves in the foot, wounding the entire industry.
• Insurance is too commoditized, with price often being the only value sold.
• The industry does not reflect the diverse society it serves.
• Consumer media focus on bad news, and insurers do little to engage them on more positive stories.
• There are no positive role models in popular culture.
Actually the answer would be none of the above but we’ll let Sam continue:
How else might the industry turn around its sorry reputation? Here are some suggestions:
• Sell service, not commodity products. Insurers and their agents must be seen as trusted advisers, not policy-peddlers.
• Better promote all the good the industry does in rebuilding homes and businesses, improving workplace and highway safety, as well as tackling global warming.
• Make reputational risk management a critical part of every insurer CEO’s job.
• Use PR reps as booking agents, not spin doctors. Give them the leeway to bring reporters into the insurance process, to show carriers in action doing good things. And make sure the top dogs are available for interviews, especially during a crisis.
• Turn employees into good-will ambassadors. You have an army of people earning their living from insurance, being told to keep their mouths shut. Give them the training—and more important, the permission—to defend and promote the business at family functions, community gatherings and wherever else someone bashes the business.
• Actively engage the press and public by meeting with editorial boards and holding open forums with the community—not just during crises, but on a regular basis.
• Work with local high schools to better inform teenagers about insurance, starting with auto coverage. Provide guest lecturers and textbook material about how the business works and why its role is critical.
• Diversify the work force, including the top levels. Few company senior managements reflect what America looks like these days in terms of race, nationality and gender. That does not engender trust.
• Make sure you are part of the solution, not just part of the problem, when coverage shortages or price challenges arise.
• Create an insurance superhero, or at least more positive figures in pop culture.
On this last point, carriers should fight fire with fire. Maybe it’s time for a remake of the vision-impaired “Longstreet,” who uses cool, high-tech gadgets to expose the thousands who file false claims.
On a more serious note, why not sponsor a new drama, “Masters Of Disaster,” about dynamic adjusters who brave the horrors of hurricanes, floods, earthquakes and other catastrophes to make insureds whole again?
Or how about backing a weekly reality program—“Insurance SIU”—portraying real-life investigators at work, to show that insurers can actually be the good guys, and might even be fun to watch!
Now back to Monte Python:
Mr. Praline: All right then, if he’s restin’, I’ll wake him up! (shouting at the cage) ‘Ello, Mister Polly Parrot! I’ve got a lovely fresh cuttle fish for you if you show…
(owner hits the cage)
Owner: There, he moved!
Mr. Praline: No, he didn’t, that was you hitting the cage!
Owner: I never!!
Mr. Praline: Yes, you did!
Owner: I never, never did anything…
Bob Hunter registered his displeasure on Sam’s companion blog entry and clues Sam in why insurers are generally viewed as favorably as child molesters here on the post Katrina coast:
I have a better idea for the industry than a new PR campaign.
How about stopping using Colossus and other computerized claims machines dialed in a way to underpay claims?
How about ending the campaign of overpricing the poor through the use of such “classifications” as education, occupation, prior limits, credit scores, home ownership and so forth?
How about ending the competition in fine print that surprise policyholders only when a claim is made?
How about sticking with customers when time gets rough rather than abandoning them? (Who made Allstate and State Farm write all those homes they are now dropping on the coast?)
You get the idea–substance will work, slick PR will only make people madder.
We already have been made “good hands” promises that can now be seen by some as bloody hands. We already have “good neighbor” promises by those who became strangers to many of us.
Let’s have action to clean up the mess and the PR will take care of itself!
Sam in response choses denial to frame his reply:
My main point is that insurers genuinely help their policyholders at the worst moments in their lives the vast majority of the time, and that they help make society safer for all. Those are the positive stories that they should be doing a better job getting out.
Our own Brian Martin also took Sam to task:
Come on, Sam, how can you still be repeating Hartwig’s lies almost four years after Katrina?
Rep. Taylor and Sen. Lott both had flood insurance. They were paid for their flood losses. They were not asking State Farm to pay for flood losses. They expected to be paid for their wind losses.
Katrina was a huge hurricane with winds far in advance of the eye. The Mississippi Coast suffered four-to-five hours of high hurricane winds with gusts to 140 mph before the storm surge. This was not an either flood-or-wind proposition. All the places that had any storm surge flooding also had the highest winds and suffered substantial damage from wind and wind-driven debris.
Yes, the insurers paid most of their Katrina claims. They paid for wind damage in every county of Mississippi, every parish of Louisiana, most of Alabama, much of Florida, and even into Georgia and Tennessee. But on the Gulf Coast where the winds had been the strongest, State Farm did not even investigate the claims. If water had touched a property, their adjusters simply drove up, handed out a check for NFIP policy limits, and in effect said, “No wind damage. Sue us and we will drag these cases out for years until you give up and settle.”
Sam again chose denial over any semblance of journalistic objectivity:
For one thing, Mr. Hartwig is a person of integrity who has plenty of facts to back up all of his assertions. I’ll let you two fight it out among yourselves.
However, don’t you think that if the industry was purposely and systematically cheating claimants out of coverage, the last claims they would deny would be those filed by two U.S. members of Congress? Denying those claims on the merits would certainly expose them to a harsh public spotlight.
Isn’t it possible that State Farm denied both those claims because coverage did not apply, and if they paid those congressmen’s claims even though they didn’t believe they had merit, wouldn’t that be fraud–even considered bribery?
Harsh spotlight indeed. And while I noted the NU was full of vim and vigor covering the American Insurance Assocaition brief in Corban, they seem to have lost their ardor for covering the case after the actual arguments were made. That is the problem with denial, it renders the subject incapable of critical thought. Play it again Sam:
JUSTICE PIERCE: So you’re sequencing, if 95 percent of the home was destroyed, and then we have the event of the storm surge, then you would not pay a dime?
MR. LANDAU: Your Honor, if we prove that the storm surge was sufficient to cause – we have that burden, again, and that is absolutely crystal clear.
If we can prove that the storm surge was sufficient to cause all of this, it is no answer then to say, ‘Yeah, but I’m going to show it — I’m going to have somebody come in and say, “Look, guess what, the window was broken before the storm surge came and then wiped away the whole house.
But you don’t get into those kinds of issues precisely because of the sequencing of the damage.
JUSTICE PIERCE: So you wouldn’t pay a dime?
MR. LANDAU: If – again, we wouldn’t pay a dime for things where we can carry our burden, which is right there in the policy, of showing that the loss was caused concurrently –
JUSTICE PIERCE: I’m giving you — the example is 95 percent of the home is destroyed, the flood comes in and gets the other five percent, and you know that.
Does your interpretation of the word “sequence” mean you pay zero?
MR. LANDAU: Yes, your Honor.
It appears the Cat has got Sam’s tongue.