Cyrus Dugger

The Trouble With Insurance Reporting

From the CJR Daily:

The Trouble With Insurance Reporting

Regular business-press readers are probably aware of ongoing disputes between some policyholders and their insurers, particularly State Farm Insurance and Allstate Insurance Co., which together control more than half of the Louisiana and Mississippi homeowners’ markets, along with Nationwide, USAA, and others.

Many of you may be under the impression—because of stories like the one in The Wall Street Journal I’ll mention below, and others in The New York Times and elsewhere that I’ll get to in succeeding posts—that:

1. The insurance industry suffered terrible financial setbacks in 2005—the year of Katrina—the worst annual losses in the recorded history of insurance.

2. Triple-digit premium increases, while regrettable because of the additional burden they represent to struggling homeowners and their job-killing effects on the regional economy, were necessary to offset the risk from future hurricanes.

3. With their solvency at risk, insurers must also curtail coastal coverage, leaving the worst risks to inefficient, bureaucratic state-owned insurers.

4. Policyholders who chose to live near the coast and yet failed to purchase flood insurance from the National Flood Insurance Program are banking on public sympathy, tort lawyers, and demagoguing politicians to force insurers to pay for flood damage explicitly excluded from insurance contracts.

5. Insurance is a particularly risky business.

Audit Readers, all five notions are not only false, but demonstrably so, and while a couple of points are in dispute in some quarters, they shouldn’t be. Despite the fact that each of those assumptions lack support, my friends in the business media repeat them ad nauseam , distorting the insurance debate beyond all recognition. (read full article)

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Posted at 1:29 PM, May 07, 2007 in
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State Farm Insurance Executives have committed perjury to the IRS. This perjury allows State Farm to avoid state and federal payroll taxes on approximately $3 Billion of annual payroll and this has been occurring since 1998 ($27 Billion and counting). State Farm Executives, while crying crocodile tears, over Katrina losses awarded themselves multi-million dollar bonuses. In 2006 the CEO received an 82% pay raise after denying coverage to thousands of Katrina victims. The IRS has been made aware of State Farm's perjury but has thus far done nothing. Is State Farm so connected they can perjurer themselves to the IRS and suffer no consequences? I have the documentation to prove my statements.

Posted by: Rich Pyorre | May 8, 2007 2:04 PM