There is something particularly unseemly in how the property/casualty insurance industry has used its power to get rich off the COVID crisis. Not that insurance industry observers would expect anything less. This is an industry that never saw a crisis it didn’t try to exploit. In fact, after 9/11, the Center for Justice & Democracy wrote a whole paper on this very topic, called Shakedown: How the Insurance Industry Exploits a Nation in Times of Crisis. Pretty much a running theme over here.
Before COVID, the industry was in the early stages of deceiving businesses, consumers, and regulators about its financial condition in preparation for creating a national insurance crisis of skyrocketing rates. This, mind you, was while it was sitting on more cash than at any time in its history. “Juries were out of control again so your premiums have to go up,” the industry started saying. Juries, victims, and lawyers were suddenly creating an urgent need for insurers to price-gouge. (See a complete explanation here.)
This is the same script they have used for the last 40 plus years to justify each prior liability insurance crisis, and what many experienced as a volcanic eruption in insurance rates. There have been three such "crises" before now.
It's easy to see a familiar yet bizarre pattern. To buy the industry's position, one would have to accept the notion that lawyers and juries were particularly aggressive in the mid-1970s (when rates shot up the first time), then stopped for a decade, then became aggressive for three years in the mid-1980s (when rates shot up a second time), then stopped for 13 years, then got all aggressive again from 2002-2006 (when rates shot up a third time), then they stopped for 13 years, and now, 13 years later, are aggressive again. Do they think we're that dumb? Who can't see an insurance industry cycle at work, which by the way is well recognized by the industry but they don't talk about it much. And to be clear, this cycle has nothing to do with claims or payouts. Actual data show those have remained stable throughout. (Why this cycle happens is all explained here.) But data and facts never stops the industry from trying to bamboozle the public. So in 2019, rate hikes accompanied by a new anti-jury crusade, began again.
But then COVID hit. Courthouses shut down. Jury trials stopped. People stopped driving, People drastically cut down on non-essential medical care, like elective surgeries, while at the same time most states passed laws immunizing hospitals and nursing homes from liability. Whoops! Now who’s gonna believe that backlogged juries, non-existent victims and lawyers who can’t get their cases heard, are driving rate hikes? Pile onto that the fact that insurers, who had already put virus exclusions in many commercial policies, indeed refused to pay virus-related business interruption claims and fought businesses in court while still marching down to Washington demanding a bailout (just in case they needed it) much like they did after 9/11.
Turns out, an insurance bailout isn’t what anyone needed from government officials. What was needed was someone to look at their books. Not only did they not refund money as they should have, they kept raising premiums while everywhere, claims dropped. Their profits doubled, their surplus (the extra money over and above what’s need to pay claims) ballooned to nearly 1 trillion dollars. Now it looks like they even hid profits in bloated reserves. Yet they are STILL raising rates.
And it’s not like we and other groups didn’t scream that this was exactly what was going to happen. (Can state regulators please start taking consumer groups seriously?)
Ha, I do sound a bit angry but actually I’m over it. I’ve decided it’s time reconsider this industry with the level of mockery it so richly – and I mean RICH-ly deserves. With humor. These people are a comedy show.
So in keeping with that theme, we present to you Insurance Isle, the latest from the Center for Justice & Democracy, who say:
[We] decided to offer Insurance Industry Fat Cats a “safe” place to go so they can enjoy their outlandish profits in peace while commiserating with other Fat Cats.
But don’t worry, our extensive sourcing puts the lie to everything they say. And our funny illustrations help make the point.
So spend some time with us on Insurance Isle, where you can "Relax at Profit Beach." "Hoard Your Money at Pirate's Cove." "Shop on Spin Boulevard." "Chill While Our PR Experts Do the Work (Social Inflation Anyone?)." "Spend Hours at Whiner's Warf." Learn how auto insurance companies worked the pandemic for maximum greed, er, bliss. It’s sure to put a smile on your face – unless, of course, you’re an insurance company.
Download the brochure - and learn all about Insurance Isle here.
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