Jim Brown
It’s been 10 years since the financial crisis on Wall Street filtered down through the insurance industry. Many national insurance companies were under siege, and even though Louisiana is a small state in population, policyholders were affected proportionally at a much greater degree than in most other parts of the country.
Louisiana is a major customer for many insurance companies both nationally and worldwide. It’s not the population that matters. It’s where the risks are located. And there are a number of major companies operating in Louisiana that have significant exposure for insurance purposes.
Just imagine the cost of insuring the offshore oil industry operating along Louisiana’s coastline. How about the nation’s largest chemical industry located up and down the Mississippi River? And there are major risks to insure in the first, third, and fifth largest ports in this country all located in Louisiana. In short, Louisiana is in the top five of states that have the highest industrial insurance risks.
When the “too big to fail” giveaways took place back in 2008, the first major insurance company to be bailed out was the American International Group (AIG), which is the largest insurance conglomerate operating in United States today. AIG has a major presence in Louisiana, with a number of its subsidiary companies selling both property and casualty insurance as well as life insurance. The Federal Reserve System’s bailout of AIG cost taxpayers $85 billion.
The first thing the AIG execs did after receiving your taxpayer financial infusion was to spend more than $440,000 entertaining their top executives at the posh St. Regis resort in California, including golf, massages, manicures, pedicures, the works. These folks sure know how to show their gratitude. You can imagine the criticism the company received for this junket. But after getting roasted for the taxpayer–funded weeklong retreat, far from learning a lesson, the same top executives thumbed their noses at taxpayers and kept on spending your money.
AIG begged and pleaded for more bailout money, and the federal government graciously complied by giving the faltering company an additional $37.8 billion in taxpayer–financed loans. So how did the top execs respond? They took off on an $86,000 hunting trip to shoot partridge in England. AIG’s philosophy is that they can have a party, but taxpayers end up with a hangover.
So who is supposed to be watching out for these shenanigans? Who regulates companies like AIG? And why have they been allowed to get away with such outrageous and irresponsible behavior? Simply put, this is the era of little or no regulation. Keep government off the backs of the private sector. Do not bog down insurance companies with all these regulations that tie their hands. You can trust them with your money … right? Let the free market reign.
In virtually every other state in the country, there is a consumer protection office, often located under the office of the governor or the attorney general, that independently checks and audits to be sure that regulated companies are following the law. Such oversight would apply not only to insurance companies, but also to utility companies that have a monopoly operating in certain areas of the state. But again, not in Louisiana. There is no independent check and balance. And the loser, of course, is the policy holder, the ratepayer, and the consumer.
The bottom line is that, thanks to the legislature, you have less protection as an insurance policy holder that just about any other state in America. And while the AIG shenanigans were ignored in Louisiana, the politicians in Washington keep telling us that companies like AIG, for the good of the country, have to be saved.
The objective in Washington following the 2008 financial crisis was to take care of big banks and insurance companies like AIG. Little concern for homeowners and small investors who suffered big losses. And here we are today as congress rolls back the fiscal requirements on the same banks and insurance companies that caused the financial crisis and wrecked the economy 10 years ago.
The goal seemed to be to keep billing taxpayers no matter what the cost. For while in the eye of politicians these companies are “too big to fail,” you and I are apparently not too big to fleece.
Peace and Justice
Jim Brown
Jim Brown’s syndicated column appears in numerous newspapers. You can read all of his columns at jimbrownusa.com.