A View from the Press Box

The insurance industry has one thing in common with major league baseball–both enjoy a cherished exemption from federal antitrust law. Still, baseball gets away with a lot more than insurers and brokers could ever hope to in managing their business. Indeed, imagine for a moment what insurance would be like if baseball’s standard operating procedure prevailed!

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They say politics makes for strange bedfellows, but I thought April Fools Day had come early when a news release hit my e-mail this morning announcing that the Reinsurance Association of America was on the same side as the industry’s chief critic, Bob Hunter of the Consumer Federation of America, in opposing expansion of the National Flood Insurance Program to include wind damage.

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In response to my March 10 blog entry, “What Goes Around, Comes Around,” Gary Wolcott, director of communications at the Professional Insurance Agents Western Alliance, lamented about how much damage Eliot Spitzer did to innocent independent agents with his crusade against big broker abuse of legitimate contingent compensation deals. I invited him to elaborate, and his musings follow. While he may be preaching to the choir, his commentary on Mr. Spitzer’s legacy are worth repeating. Read on, and please share your own take.

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Did Robert DeNiro pull off one of his greatest acting jobs with the insurer covering production delays for a film he was to shoot, only to be diagnosed with prostate cancer soon after? Or did he merely comply faithfully with the letter of his policy contract, as a court has ruled? Listen to the facts and decide.

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Insurers hit the trifecta this week! First Eliot Spitzer had to step down as New York’s crusading governor after a prostitution scandal, then trial attorney extraordinaire Dickie Scruggs pled guilty to bribing a judge in a Hurricane Katrina suit. Now the king of class-actions, Melvyn I. Weiss, copped a plea for his role in a scam to drum up plaintiffs. Why isn’t Congress investigating this parade of misconduct by officers of the court?

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The courts have not been supportive of insurers when it comes to one of the most heated hot-bottom issues in politics today–the implications of illegal immigration–ruling that undocumented employees are entitled to workers’ comp benefits if hurt on the job, even if they forged their identification papers. Even for someone like me who is against mass deportations and in favor of reasonable immigration reform, this seems to go too far.

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A recent article in the New York Times carried the alarming headline that “More Americans Are Giving Up Golf,” mainly because people just don’t have the time anymore to lollygag around the course when there is real WORK to be done–most often over the Web. But what about the insurance industry, which historically has conducted so much business with clubs in their hands? Is this trend not alarming?

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It was quite a week for the insurance industry. First, New York’s Eliot Spitzer had to step down as governor in the wake of a prostitution scandal, and then high-profile trial lawyer Richard “Dickie” Scruggs pled guilty to bribing a judge–and in a Hurricane Katrina lawsuit, no less!!! With the shortage of high-profile nemeses, the loss of these two powerful crusaders against insurer wrongdoing is a huge blow to industry reformers.

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Given the fact that getting an optional federal charter approved anytime soon is little more than a pipe dream, I hope the industry rallies around the latest proposal to use Uncle Sam not as the industry’s ultimate regulator, but more as a facilitator to make multi-state licensing of agents and brokers more efficient. I also can’t help but wonder why the same concept could not be applied to national insurance company licensing as well.

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No doubt many in the insurance industry are dancing with glee over the demise of New York’s wayward governor, Eliot Spitzer, who announced his resignation today in the wake of a prostitution scandal. But no matter how far he has fallen from grace, it doesn’t change the fact that as attorney general Mr. Spitzer exposed a seamy side of the business, putting carriers and brokers on notice that misleading clients or investors won’t be tolerated. That will be his legacy.

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