Abandonment

Next week, I expect, insurers will announce that they’re pulling out of Chicago. Risk of fire, you understand, and in the final analysis it’s not worth their time.


San Francisco? Too many earthquakes. LA? Drought (or mudslides, take your pick). Kansas? Did you see the Wizard of Oz? No way is anybody going to be responsible for yet another town wiped off the map by a twister.

It snows a lot in Wisconsin and Minnesota; ice storms down trees and power lines, pipes burst in the cold. Anybody living near a river could get flooded anytime, so forget about it, those of you on the Mississipp. Fry the whole state of Maine, too; I hear they get Perfect Storms up there.


Look, I know somebody’s gonna respond with risk-analysis graphs and such and I get it, I do, but the fact of the matter is that it’s past time we stopped with the unconditional surrender in the class warfare that leads to these insurers saying eh, too bad, so sad, see ya later every time people actually need them to do what they exist to do and what you pay them every single month to do.


We saw this during the malpractice debate, during which the high cost of health care was blamed on people who got the wrong leg cut off by an idiot doctor and had the temerity to be a little peeved. Never once did the debate shift to why exactly every insurance company headquarters I’ve ever seen look like a palace and why exactly no CEO of any insurance company I ever heard of has ever had to buy day-old bread, but they can jack up premiums and nobody says a word about what’s appropriate and what’s not. We see this during every negotiation over employment contracts ever, when the high cost of health insurance is cited as a reason why employers are shutting factories down and the question is how much employees should have to pay into their health plans, not why the health plans are so goddamn expensive in the first place.


It’s never about the insurance companies. Somehow, it’s never their responsiblity. It’s like the rates they charge just happen to them, like they’ve got no control over it at all. Nobody, and I mean nobody, holds them accountable these days. So of course they think they can just pull out of NOLA. After all, who’s going to stop them?

Not for nothing, but if the insurance companies are so pissed off about the crap rebuilding of the levees, they could have used those photos they have of most of Congress blowing Satan to lobby for somebody to do a better job. I didn’t hear a whole lot of that going on from where I sat, wealthy insurance execs giving press conferences talking about how important it was that the congresscritters they own step to their tune and build the levees decently. All I heard was a lot of whining about how hard it was to have to pay for something they said they were gonna pay for, namely people’s houses getting wiped off the map. If the levees were as important as they now say they are, the time to make that point was not after the decisions about levee rebuilding have been made. That would have made this a reason, not an excuse.


So my question is this. Who is going to stop them? Because somebody has to. We just elected a whole bunch of new congressmen and senators. Any of y’all out there not wholly owned subsidiaries of Allstate? I know since the campaign’s over some of you have been lonely for the press coverage. Want an issue to pound away at? Want to be more than That Guy Who Isn’t Barack Obama this year, with the added benefit that it’ll help some of the Democrats who elected your ass? Step up to the plate. Somebody has to say, enough. Because pretty soon it’ll be San Fran they’re abandoning, Chicago, Indianapolis, Portland, Boise, Salt Lake. Pretty soon it’ll be you, so when are you going to step up?


A.

10 thoughts on “Abandonment

  1. Insurance is a legal form of extortion. Medical insurance for example is largely sold by independent insurance brokers, who get a commission that is a very large percentage of the premium that people pay. Then, of course, the insurance company siphons off their profit margin. The small fraction that is left is what actually pays for the expenses people have that are covered by the insurance. One would have to be an idiot, comparable to George Bush, not to see the vast savings in insurance cost that would result from a single payer health insurance plan, where the payer is the federal government. This is just one form of insurance that I am in position to know something about. One would have to be an idiot of lesser abilities than George Bush not to realize that all insurance works that way.

  2. My thoughts exactly when I read the first post regarding the insurance companies bailing on NOLA. I thought well, how’s about Los Angeles? St. Louis? Any one living in a trailer of any kind anywhere?
    And it won’t stop with just housing, no more insurance for cars that are too expensive, too breakable, too small or big.
    Then it will be people, do a DNA test and if cancer is in your family tree… sorry buddy, no insurance for you even if you’ve never had cancer.
    This could start a snowball effect that, while at first hurting folks, will start hurting the old style insurance companies? Someone else will come up with a new way of doing things and they will be in for some huge business. Nature, whether the real thing or a business atmosphere, hates a vacuum and you can bet your bottom dollar some enterprising person will step in and pick up the slack. I just hope that not a lot of people get hurt while the system falls apart.
    Gindy

  3. Actually, this has already happened in California with respect to earthquakes. Many insurers stopped writing homeowners policies after the 1994 Northridge quake until the California legislature stepped in and created basically a “structural damage only” policy that private insurers could offer. (I’m simplifying here to avoid being incredibly dull.)
    As it is, many people do not buy earthquake insurance and it is not usually part of most people’s basic homeowners insurance policies. Earthquake insurance is available separately from the CEA and the CEA sells more earthquake insurance than any purely private insurer. It’s expensive. And if you have an older house, it’s really really expensive.

  4. You read my mind A. I’ve been thinking that we should run these guys out of business – starting with health insurance. They take your money and spend it on themselves, their building, and on ways not to give it to you. And no reason is too petty.
    I’m someone who has NEVER had health insurance as an adult. And now I’m dealing with a situation with my mom and her insurance coverage. I can’t tell you how much it pisses me off to have spend days and days, and week after week trying to figure this shit out.
    As for who will step up to the plate, my money’s on Elliot Spitzer.
    mrstrailerco

  5. Great post, A. You are of course right, and I am not surprised, but just in shock in a way. This is unbelievably huge news. Before Katrina, I was with a maritime firm in NOLA. St. Paul Travelers was the insurer we did the most work for. This is fucking unbelievable. There is NO WAY the city can survive if St. Paul and Zurich (because the article I read strongly implied that Zurich is next) pull out. (Not to mention the jobs lost–there are a lot of people who work for Zurich in NOLA.) According to the Houston Chronicle, together St. Paul and Zurich handle a quarter of all commercial prop insurance in the NOLA metropolitan area. And note this is just commercial, not residential, insurance. The insurance commissioner has much less power to do anything about it.
    This quote is probably the meat of the article I read:
    Marc Eagan, president of Eagan Insurance Agency Inc. in Metairie, said Travelers’ pullout is a devastating blow to the region, and he worries that other companies will follow in March after a special emergency rule expires that had artificially held insurance coverage in place after Katrina and Rita.
    “This is going to be a blood bath,” said Eagan, who added that Hanover Insurance Group, Lafayette Insurance Co. and possibly Zurich North America have indicated that they are likely to not renew some commercial policies.

    Combine this with the recent poll that a huge chunk of new orleanians are just waiting to see what happens and may leave in the next 2 years, and this is a disaster waiting to happen. We have so many friends who returned after the hurricane because of jobs or family or because they love the city who are desperately looking for work elsewhere–they are scared, and they want out before it all comes crashing down. After reading the news this morning, Mr. TJ called his best friend still there (a professor at Tulane)–his wife said he was off interviewing for a job in another state.
    If the government doesn’t step in and do something about it, the city is fucking screwed. Just screwed. This is seriously some of the worst news I’ve read out of NOLA since the storm, wrt recovery.
    And I’m sorry, but if Jim Donelon is reduced to outright lying in an attempt to keep insurers in the area, that is a really bad sign:
    In conjunction with Gov. Kathleen Blanco and Louisiana Department of Natural Resources Secretary Scott Angelle, Donelon quickly convened a summit of commercial property insurers for Tuesday. At the meeting, the three hope to advise commercial property insurance providers about the efforts to restore the Louisiana coast and improve the levee system to stave off other defections.
    “I have lived in the New Orleans metropolitan area for 61 years, and I can personally vouch for the fact that the levee system is better and stronger than it ever has been, and is getting stronger as every day goes by,” Donelon said. “We need to let Travelers and the rest of the commercial property writers know of that effort.”

    That is complete bullshit, and he knows it, and everybody who read that article knows it. The levees are not being rebuilt as strong as they need to be. That is the bottom line. No amount of blustering is going to change that fact.
    TJ

  6. Probably nothing to be done until 2009 at the earliest. This will get resolved at about the same time as the health insurance nightmare does, and will require an anti-corporation populist uprising that isn’t going to happen right now.

  7. Probably nothing to be done until 2009 at the earliest. This will get resolved at about the same time as the health insurance nightmare does, and will require an anti-corporation populist uprising that isn’t going to happen right now.
    Exactly.
    See scout’s post upstairs. That is exactly what it’s going to take. It will have to get even worse before it gets better.
    TJ

  8. This has already happened in Texas. When the insurance companies got slapped with heavy punitive penalties in lawsuits for not covering black mold removal, they just said they would not write new homeowner’s policies on existing houses. And no bank will give you a mortgage without insurance.
    The existing homes market just stopped. It took us two months to close on the sale of our house, AFTER we had the contract in place. And we considered ourselves very lucky.
    None of this would have been a problem if they hadn’t refused to pay for the mold removal (~$3000-5000) in the first place, then refused to pay for the medical problems caused by the mold (~$20,000) even after doctors traced the problem directly to the mold. No, they stalled and balked and bullied and finally got hit with a 30 million dollar penalty.
    Now it became a “crisis” and insurance companies “couldn’t afford” to pay “the huge dollar amounts” it took to do business in Texas. They stopped writing policies and threatened to pull out of the state altogether. The insurance companies basically blackmailed the state to pass laws limiting their liability in mold cases.
    They create the problem by screwing customers, then force taxpayers and customers to fix it for them. It has always pissed me off.

  9. I used to work for an indoor air quality company. I know exactly what is being left out of the statement about the way the insurance companies — headed up by Farmers and Travelers’ — screwed schoolchildren, hospital staff and patients, and homeowners in the description above.
    Insurance is extortion, period. If it were done by any but ‘respectable’ actuaries, it would be a recognized racket and as illegal as it deserves to be. The concept may once have been honorable, but the execution as it has evolved in the past 25 years is a protection racket carried out by legalized means.
    First the insurance company refuses to cover anybody it might have to pay damages to.
    Then it jacks up the premium on its customers who have to file claims.
    Then it refuses to pay the claims and sues.
    Then it refuses to pay the settlements and appeals.
    Then it refuses to renew coverage for entire classes of people at anything like reasonable rates.
    Then it whines about its expenses.
    Meanwhile, it pays all kinds of people and animals — geckos, ducks, Marshall Dillon’s superspy brother, that goofy mini-me actor — to con people into believing that this time it will be different should you need to call on the company you’re paying to protect you against the loss of your home, livelihood, vehicle or property.
    Insanity is continuing to pay for insurance.

  10. So of course they think they can just pull out of NOLA. After all, who’s going to stop them?
    This has nothing to do with pulling out of LA or the state of the levees and everything to do with extorting the feds to pass some stop loss legislation like the federal flood insurance program. And the interesting thing is it will probably be Democrats pushing for such a program — to bail out the insurance companies.
    So which is worse — bailing out the insurance companies, or leaving NOLA to die?

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