Can one of you explain the thinking that went into that commercial? Thank you.
— Slabbed New Media (@SLABBEDblog) February 2, 2015
I recently met with a group of political strategists that noticed our little blog in Soggy Bottom and the information exchange was very enlightening for me. I’m as interested in the mechanics of the story as the story itself and the tales I was told of how these folks manipulated the traditional media were very interesting. More than any other skill set these folks had a keen understanding of human behavior which is a shared passion with us at Slabbed.
The garden variety bashing I sometime engage in to drive traffic sometimes obscures the fact Slabbed is in reality a quest for knowledge as in getting all the facts that surrounded the blanket denials of insurance coverage after Katrina no matter where those facts may lead. This may sound elementary, indeed even simplistic, but I’d submit we stand in stark contrast to our own insurance regulators that ignored all the evidence of fraud on part of their corporate benefactors from the insurance industry after Katrina, Mike Chaney even going so far as to attack the Rigsby sisters, who exposed the fraud perpetrated by State Farm on the US Treasury here in Mississippi. This frankly came as no surprise to me, especially after it came out that the lawyer who ran the market conduct study for Mr Chaney left the Mississippi Department of Insurance for State Farm’s Jackson based law firm.
Insurance companies have lots of money to throw around and spend vast sums of money on shills, propagandists and their own in-house PR departments. These folks are mostly rent an opinion hookers that dispense half-truths in furtherance of their own paychecks. Armed with lots of factoids and ready made quotes, deadline pressed journalists flock to them in droves, often uncritically lapping up the intellectually dishonest drivel folks like the III’s Robert Hartwig, who this past summer passed off a bogus poll about the NFIP to the media. To her credit, Becky Mowbray over at the T-P busted Hartwig and frankly I was amused at Mike Chaney’s blatant duplicity in the Sun Herald’s reporting on the same topic. I guess Chaney tells so many whoppers he can’t keep them all straight but that is another post.
I mention all this because Ashby Jones and Joanne Lublin recently wrote a story for the Wall Street Journal on the topic of corporate whistleblowers and the new financial re-regulation legislation which is so full of self-serving corporate PR spin these two journalists should be ashamed, Continue reading “And the Wall Street Journal put two reporters on the story and still managed to butcher it. An Allstate Hurricane Katrina Fraud Update.”
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. Continue reading “The ACC Virus Continued”
With the very recent publishing of yet another list of the worst bad faith insurers, this time by the American Association for Justice, the topic of why the public holds these companies in such low esteem again becomes topical.
We’ve well chronicled the dirty tricks and underhanded tactics these socially deviant companies employ to satisfy their relentless thirst for profit but that is not the thrust of this post. Rather, in keeping with today’s theme of “the why” as Nowdy linked my comment on the Yahoo Allstate message board in her Daily slab post I’m expanding on the concepts from that post and in the process explain one of the possible reasons why an insurer with a good reputation in Chubb will be inherently more profitable than one with a bad reputation in Allstate.
When I first met Nowdy and we began to get to know each other I told her my favorite hobby was investing and to that end, the fields of Game Theory and Behavioral Finance were of great interest to me along with their political first cousin Public Choice theory, the latter two economic disiplines being relative newcomers to our body of collective knowledge.
After 20 months of writing here at slabbed I finally get to indulge those passions and perhaps educate our readers on the mechanisms at work that resulted in what became known here on Slabbed as The Scheme, a series of posts by Nowdy that explained the bad behavior of the insurers here after Katrina. In short not only do we tell you who dunnit but also how it could happen in a large organization like State Farm, Nationwide, USAA, Allstate and others. We start with the July-August edition of the Harvard Business Review and Dan Ariely’s article The End of Rational Economics:
In 2008, a massive earthquake reduced the financial world to rubble. Standing in the smoke and ash, Alan Greenspan, the former chairman of the U.S. Federal Reserve once hailed as “the greatest banker who ever lived,” confessed to Congress that he was “shocked” that the markets did not operate according to his lifelong expectations. He had “made a mistake in presuming that the self-interest of organizations, specifically banks and others, was such that they were best capable of protecting their own shareholders.” Continue reading “Have we seen the end of rational economics? Behavioral Economics explains the Scheme.”
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 (202) 253-1308
July 1, 2009
Rep. Gene Taylor (D-Miss.): In Court, Insurance Companies Provided Evidence of Fraud
Companies Admit They Shifted Hurricane Katrina Wind Claims to National Flood Insurance Program
Today, Rep. Gene Taylor (D-MS) wrote Homeland Security Secretary Janet Napolitano to bring to her attention recent statements by insurance company attorneys that show beyond any doubt that companies shifted Hurricane Katrina claims to the National Flood Insurance Program that should have been covered by their own homeowners policies.
On June 9, 2009, the Mississippi Supreme Court heard oral arguments on the interpretation of “anti-concurrent causation” (ACC) clauses in homeowners insurance policies. The attorney for Nationwide, Christopher Landau, told the Supreme Court that Nationwide applies the ACC clause to exclude coverage of all damage caused by hurricane winds if subsequent flooding was sufficient to cause the damage.
In response to questioning, Landau answered that even if a house were 95 percent destroyed by winds before any flooding, Nationwide would owe nothing to the policyholder if the flooding was severe enough to have destroyed the house. USAA Attorney Greg Copeland even claimed that it was the intent of Congress when enacting the National Flood Insurance Program that the federal government should pay for all damage caused the combination of wind and flooding.