The Oil Drum | DrumBeat: August 25, 2006

274 comments on DrumBeat: August 25, 2006

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tate423 on August 25, 2006 - 12:00pm

HAS ANYONE SEEN THIS?

http://blogs.abcnews.com/theblotter/2006/08/state_farm_insi.html

Exclusive: Whistleblowers Say State Farm Shredded Documents to Avoid Paying Katrina Victims, Allegations of Massive Fraud

Social collapse first maybe? Thousands of people are pissed! Now they've got PROOF! Bring em down...

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TrueKaiser on August 25, 2006 - 12:19pm

i am not surprised. it was probably either shred them or go bankrupt.

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tate423 on August 25, 2006 - 12:43pm

Bankrupt em in court. We need a flippin reset button.

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neon9 on August 25, 2006 - 1:31pm

Aren't they making record profits though?

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tate423 on August 25, 2006 - 1:34pm

Not sure, I know they are MIGHTY healthy in face of the hurricanes and this would explain why. I bet the aggregate numbers would astonish all of us. I think they are paying less than 25% of their claims.

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TrueKaiser on August 25, 2006 - 2:47pm

insurance company's run basically like a casino.
they are placing there bets that the monthly fee's from the insured will vastly outnumber the amount of claims they do have to pay out when stuff happens.
the big sign post that tells people that they actually lost the bet with Katrina is that they are trying to find ways no matter how minor to deny people their insurance payouts.

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Substrate on August 25, 2006 - 9:24pm

They don't just rely on fees...they actually invest the fee money as well.

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TrueKaiser on August 25, 2006 - 10:01pm

still their entire model is based on betting their income will always be bigger then what they have to pay out.
the damage done by Katrina would do any one insurance company in so they are franticly trying to minimize their lost income by shredding and denying claims.

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AlanfromBigEasy on August 25, 2006 - 3:34pm

With some limited exceptions, the performance of major, NAME BRAND insurance companies has been shameful after Katrina.

Uncontested claims, where the homeowner was willing to just take the adjusters estimate, went many months before payout. Local theory was that they had to liquidate real estate / other investments and just did not have the $$$.

Allstate & State Farm did NOT do right by many of their policy holders. Others kept a tally of the few good and many bad insurance companies.

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Bitteroldcoot on August 25, 2006 - 4:35pm

I don't suppose you have a link to that list of good companies? I'm in Alabama an have state farm.

On the other hand don't insurance regulations vary greatly state by state. Is it really that state farm was so bad, or is it that the state government was lax in making an enforcing regulations.

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PhilRelig on August 25, 2006 - 10:20pm

So much for the "Like a good neighbor..." and "You're in good hands" advertising jingles, eh?

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Prodigal Son on August 25, 2006 - 3:55pm

These are corporations -- amoral, profit-maximizing machines that will do almost anything for a buck. The people who run them are legally bound to run as many risks as possible to make a profit.

Remember the Pinto and how Ford calculated it would be cheaper to settle lawsuits than recall the car and therein save lives?

Enron. WorldComm. And now maybe State Farm. When do exceptions become the rule?

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Seadragon on August 25, 2006 - 9:19pm

Actually, Ford made the calculation that it would be cheaper to pay a few death claims than put a very cheap (<$25) fix in the Pinto. The US courts rightly reminded Ford that we don't allow them to do this kind of "cost-benefit analysis."

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TrueKaiser on August 25, 2006 - 10:03pm

they were only unlucky enough to get caught.

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Prodigal Son on August 27, 2006 - 2:25am

Ah, but they had to be punished by the court system to be reminded of this, no? Only threat of punishment, not moral considerations, led to Ford correcting its behavior.

This is normal behavior for the corporation. Only the relatively sure threat of costly punishment leads to what we would call 'good' behavior.

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274 comments on DrumBeat: August 25, 2006

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