People Get Ready

[ make levees, not war ]

The insurance “protection” racket

Posted by schroeder915 on July 25, 2006

Allstate insurance decided to cut 120,000 Florida customers and 30,000 New York customers earlier this year. CEO Edward M. Liddy explained the advantage to shareholders:

“We are managing our exposure down,” Mr. Liddy said. “As we do that, we are trying to protect our brand.”

A Babel Fish translation from bullshit to English:

F**k all y’all policyholders!

“The good hands people” is a euphemistic stretch for a company that operates more like dungeon guards brutalizing loyal tribute-paying patrons with mailed fists.

Now, after a 26 percent increase in first-quarter profits, and a five percent increase in second-quarter profits, Allstate is threatening to leave Louisiana if it can’t drop wind and hail coverage here.

How does Allstate turn a profit, even after multiple hurricane hits to Florida and after Hurricane Katrina devastated the Gulf Coast? Simple: Collect more in insurance premiums; pay out less in home and automobile damages.

The Louisiana Insurance Rating Commission approved a 52 percent Allstate rate increase in April. Meanwhile, Allstate said that it had paid 90% of the claims filed from Hurricane Katrina through May, but there are quite a few people out there who would argue otherwise. Furthermore, we ought to ask if those claims were paid out satisfactorily.

After residents took a left jab to the head from Hurricane Katrina, Allstate is going for the K.O. with a mailed-right-fist smash.

Louisiana Insurance Commissioner Jim Donelon’s efforts to hold Allstate and other insurance companies to their promises may amount to nothing without decisive action at a federal level that threatens their business prospects elsewhere.

Update:

Robert Hartwig, chief economist of the Insurance Information Institute, quoted in The Advocate:

Another area for which the insurance industry has drawn fire: record profits for a year that saw the most-expensive catastrophe in U.S. history.

In 2005, the insurance industry realized a profit of $43 billion, $4.5 billion, or 11.7 percent, more than the previous year. The industry was able to add $35.8 billion to its reserves, money set aside to deal with unexpected claims, despite $57.7 billion in catastrophe losses.

Hartwig said insurers were able to generate the profits because of strong returns on the investment of insurance premiums.

However, federal law says insurance companies can’t use the profits generated in one state to subsidize the losses in another.

Related:

The daily Katrina slog

“My dad hates Allstate!”

Hold on to your wallet

Suspect Device: The Blog — Fucking A right it’s blackmail

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