Thursday Links

Some of these have appeared in comments recently, others I’ve put out on twitter. I have a busy day on tap so without further adieu:

Group: Insurers charge 300 to 600% more for coastal than inland policies ~ Anita Lee

Jeff council eyes new contracts to complete over-budget arts center ~ Jeff Adelson

Jeff Parish attorney cuts off IG’s access to e-mails, for now ~ Paul Murphy

Jefferson IG and parish attorney clash on access to employees’ emails ~ Jeff Adelson

Sheriff Mike Byrd turns in resignation on the side of Highway 63 ~ Warren Kulo Continue reading “Thursday Links”

Market manipulation and price fixing explained to the point even a clown can understand. Paige St John exposes the State Farm shuffle in Florida for the Herald Tribune.

Louisiana Insurance Commissioner Jim Donelon

Folks rarely does a business writer nail and explain a very complex subject in the interplay between our fragmented insurance markets here in the US  and the world of high finance but Paige St John over at the Herald Tribune explains how State Farm really didn’t pull out of Florida’s hurricane insurance market, how they game the anti trust exemption insurers enjoy and how they are able to price gouge as a result.  These same forces are at work in Mississippi, Alabama, Texas and Louisiana.

We last featured Paige’s work last October in our post It’s a ‘Bermudan’ day in the neightborhood…Paige St John at the Herald Tribune exposes why ‘buying Bermuda’ is like being hooked on crack and it is clear Paige is on track for a big time business journalism award for her work in this area.  Finally it was our post on Paige’s reporting on the Allstate McKinsey papers that literally landed us on the national blawg scene as Victoria Pynchon covered our coverage.

Here are a few excerpts:

When State Farm stepped up its march out of Florida, it loudly and publicly claimed hurricanes were pushing it toward financial disaster.

The company argued it had to leave the Florida coast — and drop nearly half a million customers — because it could not profit in a state wracked by so many storms.

But State Farm never really left Florida. Continue reading “Market manipulation and price fixing explained to the point even a clown can understand. Paige St John exposes the State Farm shuffle in Florida for the Herald Tribune.”

Allstate cancels thousands of policies in coastal Alabama

Jeff Amy should be proud. His story was picked up by the AP and posted to the Yahoo Allstate summary page. We’ll link his report at the Mobile Press Register directly:

Allstate Corp. and Alfa Mutual group will cumulatively drop wind coverage on 14,000 homeowner policies in Mobile and Baldwin counties over the next 18 months, Alabama Insurance Commissioner Jim Ridling said Tuesday.

The cuts will affect as many as 7 percent of all homeowners in the two counties.

The moves are another jolt to Alabama’s ailing coastal insurance market. Since 2004’s Hurricane Ivan, Allstate, Alfa and State Farm Fire and Casualty have said they would drop wind coverage or all coverage on nearly 41,000 policies, according to Press-Register counts.

Alfa spokesman Jeff Helms said models show his Montgomery-based firm has too much money at risk if a hurricane hits Alabama.

“This is something we needed to do to make sure Alfa could continue to serve its policyholders and pay claims statewide.” Helms said of the decision to cut wind coverage from 5,000 policies.

Allstate, the state’s No. 3 property insurer, is withdrawing in reaction to state regulators’ refusal to allow it to raise rates as high as it wants to pay for reinsurance, said Ridling and Shane Robinson, spokesman for the Northbrook, Ill.-based company. Continue reading “Allstate cancels thousands of policies in coastal Alabama”

Remember the main!

No, I didn’t misspell it. What I’m remembering the mainframe – and IBM’s marketing decision that misjudged the market for desktop units.

Sop and I unknowingly read the same comments on the ALL board and he connected the dots in his excellent post on Merlin and McKinsey.  The story of the Mac on my mind is told in one of my favorite books, Organizing Genius – relevant to insurance issues because it describes the development of an alternative that became a new standard when the big blue blinked.

Systems are built to resist change. A strong system will assimilate change to the point that over time what was intended to change the system simply becomes a part of the system – the National Flood Insurance Program a case in point.

Real system change occurs when external events pressure the system to the point that it has to change to survive.  In that sense, Hurricane Katrina will prove to be the wind of change for an insurance system exempt from federal anti-trust law – an exemption that created reserves so large only 4.2% was lost from the largest insured event in history, according to the White Paper linked below.

Remember the main, read or re-read Robert Hunter’s White Paper, take another look at Sop’s post – then, run out and buy yourself a copy of Organizing Genius.