Salon.com MobileDid this guy Liddy come to AIG because long-time CEO Hank Greenberg had to leave after AIG paid the biggest-ever fine for illegal operations? I believe yes, or some even worse story.
Enron was an AIG wannabe. Enron failed when they got caught, because Enron ran out of money. But AIG had enough money to keep on sneaking on. AIG has several "okay" insurance subsidiaries. You might buy one of these companies and do okay.
But I say, do not trust AIG. They will figure out a way to screw you.
You should read "Good Hands to Boxing Gloves." Funny that you should compare AIG to Enron. The model that Allstate used to redesign all its internal claims practices was based on Enron. They even used the same consulting firm.
Andrew is right--Ed Liddy is not a white knight riding to the rescue. He is a very wealthy man off the backs of Allstate policyholders.
It wasn’t just Allstate, it was every major insurer who engaged in the process of deny, delay, and defend. They still employ this tactic today. They figured out that the majority of their claims were $50,000 or less. The best way to save money and maximize shareholder wealth was to deny as many of those claims as possible, regardless of their merits. Most injured folks didn’t have the resources to do battle with the insurance companies, and so accepted the piddling settlement amounts they were offered. The compensation for an injury was calculated by using a computer program. If a person didn’t accept the settlement, the companies would engage in litigation practices designed to delay trial as long as possible. By the time a trial would happen (oftentimes more than 2-3 years after an accident), the injured person has mostly healed and showed no outward sign of injury (unless the injuries are catastrophic). At that point, the insurance would defend that claim by accusing the injured person of being greedy (“Look, he’s not even hurt but is asking for money!”). Never mind that this person may have gone through years of painful physical therapy to get healthy again. This tactic was highly affective.
The insurance companies also poisoned the well by engaging in a systematic disinformation campaign to convince the public that all plaintiffs were greedy liars, and trial lawyers were destroying the economy. The MSN bought into this program because it was an easy narrative to sell. So what has happened in the last 10 years is that the actual number of lawsuits have decreased and jury awards have gotten smaller, yet we continue be inundated with stories about “runaway juries” and sky high litigation rates. The net effect is that injured people have been screwed over, and the bottom line of insurance companies has gotten fatter. It’s just another example of how big corporations have gamed the system and turned us against each other to increase their profits and influence. Welcome to modern society, where every part of our lives have been corrupted by big business.
As someone who handled a number of claims following the 1994 earthquake in Los Angeles, I can say that all insurance companies will completely lowball you and force you to assemble your own team of experts to force them to agree to a real settlement amount that would actually fix the house.
I handled about a dozen claims, and the final negotiated amount was AT LEAST double of what they had originally estimated.
They just hope that people will sign on the dotted line to get their check.
Except for the smallest repairs, claim settlements are always adversarial.
Robert Reich discusses why this type of phenomenon has become common in the way capitalism is practiced and why we should expect this kind of behavior to increase. Basically, corporations exist to maximize shareholder value and CEOs are bound by their fiduciary duty to do all they can to attain that goal. Any other goal or decision is ultimately evaluated by whether it helps to maximize shareholder value or not. If that means good deals for customers, then lucky customers. If it means screwing policy holders who thought they had more protection than they did, then too bad for those policy holders. All we can expect from CEO is that they'll stay inside the letter of the law most of the time, because actually breaking the law is very risky.
Is a great crime.
Someone impressive said something like that.
USAA - It's a co-op - surpluses come back to the policyholders;
Anyone who can credibly feign ignorance at the fact that insurance companies don't make money paying claims is borderline . . . ; and
Bad faith makes plain and simple abuses very expensive - true they will try to knock you down, but isn't limiting payouts in "soft tissue" injuries something we all benefit from? The adversarial system being described is not payment being withheld from policyholders (in most cases), but from adversarial claimants.
Unfortunately, limiting payments to claims does not make the premiums go down for you and me. It makes the stockholders and executives get rich.
Of course you can argue that someone's injuries aren't real. The major insurers do it all the time. Until you've lived with a soft tissue injury, don't assume that you know they're a lie. They are not. It's like saying PTSD isn't real because you can't see it on an x-ray.
The data is all there in the book. By severely limiting claim payments, the insurance costs for you and me, ordinary people, actually stayed the same or went up. And paying claims is what insurers are supposed to do. They hold our money in trust to do exactly that. The companies calculate a portion of premiums for profit. Allstate (and other insurers) decided that wasn't enough, and they needed to raid the cookie jar. That's our money in that big insurance cookie jar, held in trust until we need it.
This is news to someone?
An interesting observance, Andrew.
Liddy is not alone within a corporate culture of veiled disdain and ruthless and predatory agression against everyday people, customers, consumers, taxpayers and claimants who are regarded as a powerless underclass to be ransacked, run-over and roughed-up if necessary.
As recently as ten years ago, Corporate disdain of customers was the exception, not the rule and a sign of poor strategic management. The prevailing model of corporate success was to create a long-term win-win relationship with the customer that would foster loyalty and create word-of-mouth advertising to attract new customers.
Not anymore. Wall Street rating agencies began to penalize mutual benefit strategies and reward the firms who practiced hostile, slash-and-burn policies toward thier customers.
Nor has this new attitude of disdain been limited to the corporate culture. A parallel attitude arose within the governmental culture as well.
It boils down to this: Those perceiving themselves as powerful now distinguish themselves from the "Powerless". This prevailing attitude of the "Powerful" is dripping with entitlement: To be free of the laws that limit the behavior of the rest of us, To be compensated or to take whatever material wealth their raw power might allow them, and return to their homes and spoil their already jaded children behind locked compounds, security checkpoints, and cypher-locked gates.
