The last post told how big insurance (let’s call it “BIG-I”) created Insurance Services Office (ISO) as their industry shill. ISO became the “handlers” if you will of various puppet commissioners. Among other things, ISO finessed rate increases and designed trap door policies (“coverage parts”). (Gruesome, I know, but it’s their word not mine). Frankly ISO did whatever Salvatore “BIG-I” said do. Of course ISO was BIG-I cause it was owned and controlled – as a non-profit if you can believe it – by BIG-I. Thing was nobody really seemed to notice or care.
Well remember how that Georgia cracker almost capsized BIG-I, went hog wild and damn near destroyed the Sherman exemption all by hisself? That was a real tipping point in BIG-I history, back in ’44, but thanks to a secret industry formula, lobbyists + cash = act of Congress (L+$=AOC), BIG-I was sitting upright again. McCarran-to-the-rescue in ’45. We’d just finished whupping a boatload of Kraut butt and everybody’s pretty happy. Momma got a toaster, baby’s got a biscuit, and daddy . . . a shy-knee-new Dynaflow.
Another 40 years pass, and this time it’s ISO who almost wrecks the ship. See in those 40 years insurance went from something you might consider taking out if you just wanted, to full blown Jersey style marketing: we got an offer of coverage you can’t refuse. And we couldn’t refuse, but not cause of Bruno. Forty years of running wild, untouched by fed regulation or anti-trust, BIG-I had by now hijacked so many legislatures you couldn’t buy a house, go to the hospital, get surgery, drive a car, get a loan or anything else unless you first bought insurance. (Wonder why it never got reclassified as a special purpose contract or public interest contract, you know, something making it subject to some regulatory terms; it sure ain’t my idea of a negotiated, voluntary contract).
By ’88, ISO had racked and sacked a bushel basket of commissioners but in those days, BIG-I hadn’t yet figured out how to trash state AG’s and get people to buy into it. But some of these AG’s were getting pretty darn uppidy about ISO’s “commissioner handling.” AG’s in those days couldn’t be trashed by paid shills like Robert Hartwig cause BIG-I hadn’t perfected media pimping. BTW, speaking of Hartwig, here’s one of our own judges, third from left, at a 2004 tort reform confab, an invited guest of Hartwig and BIG-I.
Those days, AG’s were able to police their states for racketeer types, and do what they were elected to do – apply paddle to corporate ass. Getting the puppet commissioners in line was a nice start for ISO, but pretty soon BIG-I would realize, some of these upstart AG’s simply gotta be whacked.
As fate would have it, just about the time Nationwide (presumably using ISO) sneaked the ACC virus into Mississippi, the mid-1980’s, ISO was getting its New Jersey ass sued off for anti-trust violations in 20 states. (“Geezus . . . the f-ing Sherman act again . . . can a man get some damn peace round here”). Yep, in February 1988 a wolfpack of AG’s cornered ISO and its BIG-I owners for price fixing. Had they been successful in this rock solid trust bustin’ case, maybe, just maybe a third of Mississippi’s real estate would be intact today. Here was another tipping point . . . so what went wrong this time?
Well, ISO’s top dog knew this case had deadly blowback. When he was interviewed in 2000 he said this:
the case started to move toward discovery, depositions, and ultimately, a trial in front of a jury in San Francisco. I, for one, did not want to bet the ranch on that . . . there was a move by certain segments of the industry to make changes in the McCarran-Ferguson Act . . . the governor of Texas . . . questioned the propriety of an insurer-owned and controlled organization gathering data from those insurers and then issuing advisory pricing information based on that data.
Up to then ISO was of course a non-profit owned by the same insurers it was shilling for. So, I suppose one of the ISO men came up with a plan: “hey, suppose we totally lay ISO on the table, know what I mean . . . tell the court and AG’s hey, we’re willing to change ISO’s ownership, hey, BIG-I is gonna get out . . . just supposing we did that, would that be of interest to your people?” It was. It settled the price fixing and anti-trust case by 20 state AG’s, and ISO never went before a panel of tax paying citizens (remember those jury things) to answer the charges.
Bada bing, ISO’s back in business and everybody’s happy . . . except for one thing, what about BIG-I losing its percentage . . . hey, that ain’t right. Fugettaboudit, ISO’s men got another plan. So ISO drops it’s non-profit thing you see, and say it changes to a C corp you know, and hey, a C corp’s got stock. And guess who now wants to buy the controlling interest in ISO baby, a whopping 85%? You got it, BIG-I.
So ISO slipped out of a deadly anti-trust case this way. It shoved BIG-I out the back door while a pack of trust bustin’ AG’s broke in the front. Then, with the fracus settled, opened the back door and let BIG-I back in as 85% owners. Now that’s bidness, Jersey style baby.