Canary In The Insurance Industry Coalmine

For years now, a lot of states' insurance regulatory agencies have been withering and dwindling, as experienced people flee or retire, never to be replaced. The seductive philosophy of deregulation has been increasingly embraced and implemented in most states, and it has taken a while for the excesses of such policies to become apparent. Here's a news story that details the predictable consequences of such policies--you get charismatic financial b.s. artists gaining control of insurance companies, via complicated and deceptive financial shenanigans, and then plundering the assets of said insurance companies, all while the overworked regulators are looking the other way.

Dallas National was a bit of a questionable operation, from everything this writer could observe, even before the nouveau riche whiz kid took control. But once he got it, hoo boy, did he have fun with the assets. It was a great party, while it lasted, hosting campaign fundraisers for Nikki Haley and using a quite-possibly-fake Caravaggio as an asset while he lived the good life. And nobody bothered to check the fabricated items on his resume, not until after the wheels started to come off and the whiz kid  checked himself into Bellevue with a nervous breakdown.

Now, they're trying to figure out "where the money went" and all the politicians and idiot enablers and hangers-on are running for cover. But before it was discovered that this emperor had no clothes, he managed to get four former insurance commissioners on his board, along with Bill Richardson, for crying out loud. Smoke and mirrors sure can pay well, for a while. And then it all ends in tears, as they say, and the rest of us are left to deal with the aftermath and the bills for all those expensive cigars and wine.

Saving Santa Claus on Workers Comp

It's true. We're in the process of obtaining Workers Comp premium reductions/refunds for a Christmas-themed amusement park in a town called Santa Claus, a refund in excess of $10,000. So that pays for an extra elf or two during the holiday season, I guess. Hopefully keeps us on the right side of the "Nice or Naughty" list for a while.

An Interesting Phone Call

I just received a very kind phone call, from an attorney who had retained my services as an expert in litigation over proper Workers Compensation insurance premiums. Based on technical input from me, the attorney just obtained a Summary Judgement that essentially told the insurance company to tear up their audit bill for an additional $350,000.00. The judge also had some harsh words for the insurance company, I am told. In this case, a business had an initial estimated premium of around $2,000.00. Years after the policy ended, the insurer re-figured the audit, claiming that the use of uninsured independent contractors justified approximately $350,000 in additional premium.

It was true that this company did use independent contractors--a fact they disclosed on their initial application. The policyholder did not realize that they could be liable for insurance charges from the use of these independent contractors, and the insurer also overlooked this when they underwrote the policy, audited it, and renewed it.

I was able to point out certain Illinois insurance regulations that addressed this issue, and that essentially limited the ability of the insurer to make such large premium increases so late in the game. The judge apparently agreed.

It is always gratifying to be of assistance to the court in understanding these technical issues, as oftentimes most people who possess such understanding work for the insurance industry, and thus it can place policyholders at an unfair disadvantage when disputing such matters in court.

The attorney was very kind in his phone call to me regarding my assistance in identifying how the insurer had failed to take into account these Illinois insurance regulations. In truth, I could only point out the technical issues--it took skilled legal work to produce this Summary Judgement outcome for the policyholder.