Harvey Rosenfield

Hold On To Your Wallet

For the liability insurance industry, these are the best of times, and the worst of times. Best, because the industry's first quarter profits were up 29%; in 2004, the industry posted a whopping $41 billion in profits, up nearly a third over the year before. This pig-out is the result of four years of unrelenting premium increases that insurers have tried to blame on tort lawyers and tort lawsuits. Insurers say that there have been enormous increases in claims and lawsuits. That makes no sense: premiums for auto insurance alone rose 45% between 2000 and 2004, but nothing else went up that fast. There was no sudden epidemic of bad driving, car repair costs rose only modestly, even the enormous inflation in medical care costs led by the liability insurance industry's greedy cousins in the health insurance marketplace cannot explain such increases. As I will reveal on Monday at the Drum Major Institute's "Marketplace of Ideas" discussion, the industry's excuses are an elaborate fabrication involving a manipulation of the financial books worthy of the folks at Enron.

That's why these may be the worst of times for the industry as well. Maurice Greenberg, the infamous dictator of worldwide AIG, has fallen amidst a long overdue investigation, led by New York Attorney General Eliot Spitzer, of financial irregularities that include allegations of manipulating the books and defrauding state regulators. Spitzer's only touched the surface of the corruption in this industry, but even that has catalyzed mostly comatose state regulators. If our public officials start digging into the insurers' accounting practices, they are going to find that the so-called "insurance crisis" of the last few years was a commercial fraud perpetrated upon a vulnerable economy by an out-of-control industry. And every American has had their pocket picked in the process.

Hear Harvey take on the powerful insurance lobby on behalf of 'the little guy' and speak about his success in lowering the cost of insurance at our next Marketplace of Ideas talk on Oct. 24.
Read more about the talk the insurance industry doesn't want you to hear

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Posted at 6:56 PM, Oct 20, 2005 in Insurance Industry
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