Commissioner Chaney brays to the Mississippi Press defending his State Farm rate hike

I had to laugh when I saw our feckless Insurance Commissioner Mike Chaney tap dancing his way around Harlan Kirgan at the Mississippi Press defending the latest rate up his office has given State Farm. The story also gives me a chance to weave in some other news and perhaps show case the intellectually bankrupt ideas regarding free markets espoused by our big insurance lovin’ Commish. Let’s begin with the piece that appeared Wednesday in the Mississippi Press:

Mississippi Insurance Commissioner Mike Chaney said he was not happy about granting a 19.5 percent homeowners rate increase to State Farm, but he had little choice.

“Would you want me to have 26,000 policies canceled on the Gulf Coast with nobody to write coverage for those 26,000 people?” Chaney asked.

He announced on Nov. 30 that he had approved the rate increase for State Farm Fire and Casualty Co. on homeowners insurance in Jackson, Harrison and Hancock counties.

In a statement, Chaney said the rate increase balanced the need for “affordable rates and sustainable premiums in face of rising costs to companies.”

Rising costs to the companies? Only in Mr Chaney’s world as Jim Brown explained yesterday in his column:

Hurricane season just ended with no storm activity. Cost of insurance is dropping all over the gulf south. Florida’s average property insurance rate dropped, according to Governor Charlie Crist, by 16%.

We’ve had 4 straight Hurricane seasons with little activity outside of Ike and Gustav in 2008 yet Mr Chaney claims their costs are climbing. He is right that costs are climbing in Mississippi mainly because he keeps granting his buddies in Bloomington and Northbrook large rate ups. But it gets more clownish from here as our Commish is an unabashed advocate of free markets. Classic economics says that when a market void is present it will be filled by new entrants to the marketplace. That is exactly what happened in Florida when State Farm threatened to leave as new entrants to the insurance market there snapped up escapees from the Farm as quick as they could cancel. Evidently Mr Chaney does not believe Mississippi has a viable insurance market as we continue with the Mississippi Press story: Continue reading “Commissioner Chaney brays to the Mississippi Press defending his State Farm rate hike”

Slabbed Daily July 22-24. Lets tie a few things together

ying-yangThere have been a good number of news tidbits that do not necessarily constitute a post here on Slabbed on their own but when taken together tie up several loose ends and lend context to a story that does merit it’s own post in Mike Chaney’s recent insurance forum held last Thursday and Friday here on the coast.  So let’s backtrack a week and shake us up slabbed insurance cocktail by beginning with Anita Lee’s coverage of day 2:

Gov. Haley Barbour joined the coastal insurance debate Friday, telling an audience he believes regional compacts would be the best way to regulate wind coverage in coastal zones from Texas to Maine.

Barbour introduced The Travelers Insurance Cos. president, Brian MacLean, to explain the company’s proposal for improving the coast insurance market. Insurers have pulled back from coastlines in recent years, leaving state-run wind pools to fill the void.

Wind pools were intended as insurers of last resort, but their market shares have grown to levels that experts agree are unsustainable. Insurance works by spreading risk, not concentrating it.

Haley has been conspicuously absent from the insurance scene refusing to comment on the litigation while offering cheap lip service to Gene Taylor’s multi peril bill. I suspect he and the State GOP has been searching for a way to throw a bone to the people on the coast that helped elect him while working hard to preserve GOP big business bonafides with the campaign money machine that is big insurance. Continue reading “Slabbed Daily July 22-24. Lets tie a few things together”

Some clear signals the Prez is crossways with Gene Taylor

Not that such doesn’t help Gene Taylor with the local voters, the majority of which are very conservative and part of the 30 percent of the populace who do not care for Obama’s job performance (and never will). So while the new adminsitration didn’t even bother to meet with Gene on his bill to reform the NFIP before he came out against it, here is Mr Prez cuddling up with big insurance so they can have an advance briefing of what he intends to do along the lines of regulatory reform. Reuter’s reporter and Sen Chris Dodd mouthpiece Kevin Drawbaugh has the III talking points well summerized:

Insurance industry reform will be the chief focus of a briefing scheduled for Thursday evening by Obama administration officials to financial industry lobbyists, said sources familiar with the agenda.

Topics possibly open for discussion include a proposal to establish a U.S. insurance regulator. The nation’s more than 6,000 insurers are now regulated largely by state and territorial governments.

The briefing could range further afield, possibly covering other parts of the administration’s financial reform agenda, such as establishing a systemic risk regulator and writing new rules for derivatives markets, the sources said.

The snubs don’t stop there as Michael Newsome reported today in the Sun Herald: Continue reading “Some clear signals the Prez is crossways with Gene Taylor”

Tyler Durden and Marla / Sop and Nowdy: Bitter Financial Intercourse??

I got a kick out of Tyler Durden’s welcome of Marla to  the Zero Hedge blog mainly because it reminded me of how Nowdy and I sometimes interact:

She pisses me off on a regular basis, but, as the only way to truly grow is through conflict, we all will benefit from her (twisted) perspectives.

Actually I think I piss off Nowdy on a regular basis but man o man has she grown over this past 19 months….;-)

Marla’s first post, like many done by my blog partner Nowdy was a hit out of the park. Is the SEC captured and toothless? You betcha!

In the annals of rank regulatory intercourse there isn’t much more severe debauchery than the distant history that is the BankUnited story. Yes, big bank failures have become so common that they seem to pass through the cycle news unnoticed, untapped and unexplored. The ugly girl on prom night. Attended to briefly, then discarded in the blinding haze of hangover blurred Sunday morning sunshine, a rueful shake of the head and the cursed oath never again to drink Jagermeister. Even the deep investigation into IndyMac seems to have joined the ranks of early morning beer goggle mistakes and is now attended by an endless chorus of “who cares” or perhaps “so what?” Last we checked the remnants of BankUnited were about to be acquired by W.L. Ross & Co., Blackstone Group and Carlyle Group. We wonder if some due diligence details haven’t escaped their notice in the rush to vacuum up the marbles.

Picking through some of BankUnited’s public filings we discovered some interesting details.

From BankUnited’s 2007 10-K:

For the 2007, 2006 and 2005 fiscal years, BankUnited retained the law firm of Camner, Lipsitz and Poller, Professional Association (“CLP”), as general counsel. Alfred R. Camner, Chief Executive Officer and Chairman of the Board of Directors of BankUnited, is the Senior Managing Director of CLP. For the 2007, 2006 and 2005 fiscal years, BankUnited paid CLP approximately $4.9 million, $3.6 million, and $3.5 million, respectively, in legal fees allocable to loan closings, foreclosures, litigation, corporate and other matters. Errin Camner, Managing Director of CLP, is the daughter of Alfred R. Camner. Continue reading “Tyler Durden and Marla / Sop and Nowdy: Bitter Financial Intercourse??”

Attention all life forms at Starship LSBME: Resistance is Futile…..(Updated)

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)”

The Jawbone of an Ass: Unbridled Arrogance and Regulatory Capture at the NAIC.

With the jawbone of an ass, heaps upon heaps, with the jaw of an ass have I slain a thousand men.

Let’s set this up with yesterday’s WaPo story on the extraordinary recent events at the NAIC:

Insurance regulators from across the country were scrambling yesterday to address a growing threat to insurance companies and the consumers who depend on them.

As the industry’s financial condition deteriorates, many companies have asked their home-state regulators for permission to change the way they measure and report their financial strength. Some regulators have expressed a willingness to grant it.

The requests have been pouring in since the National Association of Insurance Commissioners last week rejected the insurance lobby’s plea for blanket relief.

The public faces the chaotic prospect that insurance companies could be allowed to operate by different rules, and that rules meant to protect their financial stability could diverge sharply from state to state.

The situation is shaping up as a major challenge to the industry’s system of regulation, which is controlled at the state level.

The Consumer Federation of America and the Center for Economic Justice, an advocacy group for poor and minority consumers, yesterday told regulators that granting relief on a case-by-case basis could amount to regulators “anointing winners and losers” and could reward companies that managed their finances poorly at the expense of more successful competitors. Continue reading “The Jawbone of an Ass: Unbridled Arrogance and Regulatory Capture at the NAIC.”

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….”

The Florida Press Excoriates State Farm. Gov Crist Neither Captured or Impressed.

According the the Insurance Information Institute Mississippians pay the 6th highest rates for homeowners insurance (HO) in the country in a state with 6 coastal counties of 82 total. We are one slot ahead of earthquake prone California, three slots below the Florida, the entire state of which is prone to Hurricane wind damage.  By way of contrast South Carolina’s HO rates come in at number 16 despite being low and having a very developed coastline. North Carolina, with it’s famous outer banks of inhabited barrier islands comes in at 33 while Georgia, home to historic Savannah check in at 27. Texas and Louisiana check in with the highest and second highest HO rates respectively. While our good friend Sup can (and hopefully will) list the variety of reasons homewoners insurance rates vary so much from State to State for purposes of the remainder of this post I’ll operate under the assumption that in the complexity of the insurance marketpace and the associated state by state market fragmentation lies opportunity. Such as the opportunity for an insurer with a nationwide and global viewpoint to generate additional profit via ye old money change by statutory fiat. Perhaps this post will illustrate why.

We will begin with a compare and contrast between how Florida Governor Crist has handled big insurance versus our elected insurance commissioner’s genuflect  and beg approach. The Mississippi GOP has chosen to directly subsidize our wind pool with the money going to buy more reinsurance. Florida, OTOH now requires transparency and learned first hand that bending over backwards for insurers didn’t mean the citizens got a good deal. Does State Farm’s announcement it was leaving Florida last week really mean Mississippi’s insurance market (where State Farm is refusing to write new policies) is “healthier” than Florida’s (where the Farm is pulling out)? Let’s start with Commissioner Chaney’s press release on that topic:

Commissioner Chaney also states in the letter that the Mississippi insurance market is in a very different and much healthier position than the Florida market.

“The Mississippi Insurance Department has worked very diligently to avoid finding Mississippi in the same situation as Florida,” Chaney said.

Do average Mississippians buy into that? Let’s hear what they have to say:

“The politicians have given the insurance companies a license to steal.”

“They are a full line insurance company. They should not be allowed to cherry pick. Our insurance commission should run them out of the state.”

“Time to take the policies for my life insurance, wifes life insurance, the 3 vehicles that are insured, the RV’s insurance and health coverage somewhere else. If enough policy holders would actually do this also, we could run them off the coast. Insurance Commission won’t do it.”

“Why are we allowing the insurance companies to hold the residents of the Mississippi hostage? For decades, we’ve paid whatever they have requested, and when the first major catastrophe hits, this is the treatment we receive. If State Farm is so adamant in their position in the way they do business in our state, why are they still here? Why are we accepting this treatment?”

The difference is striking and begs a natural question. Are coasties drinking all the koolaid or are our elected officials here in Mississippi peeing on our legs claiming rain? The press and editorial boards across Florida are giving this insurance thang a hard looksie (H/T Steve). First off is columnist Michael Mayo of the Orlando Sun Sentinel who comes to the conclusion we need a good multi peril solution in his column “How do we cure Florida’s sick property insurance system?”: Continue reading “The Florida Press Excoriates State Farm. Gov Crist Neither Captured or Impressed.”

Don’t get mad get Slabbed: Welcome to the Farm’s Jilted Policyholders in Florida

H/T Steve for the new jingle.

Type State Farm in our search box for the myriad of ways the Farm fleeced it’s customers here after Katrina. If ou want to know what Mississippians who have dealt with the Farm first hand think click here and scroll to the comments. These two sum it up:

All coastal states should band together and tell State Farm and the others, if they are a full line insurance company they cannot cherry pick. I am afraid our new ins. commish. will just roll over too.

Why would anyone anywhere in the nation want to insure with State Farm? Can’t people see what’s going on. I know that after Katrina, SF held their rates for awhile because they were trying to save a little of the terrible reputation they had left. These b_____ds need to be in a MS jail, not in the insurance business. Nope, never had SF insurance, no grudge, just can smell a rat from a mile away.

So it could be worse folks. Your insurance commish could be captured by the industry he is supposed to regulate like ours in Mississippi who indeed has done a great job working for State Farm. (Vid capture coming soon, Commissioner McCarty will love it. ;-).