A View from the Press Box

Here we are, holding our breath again, waiting to learn whether American International Group can stay afloat amid rumors of a record loss in the fourth quarter, while wondering if Uncle Sam will once again come to the rescue. At least one insurer organization has raised the bigger question of whether the bailout is giving AIG an unfair advantage in the insurance market, and what impact that will have on healthier competitors in the long term.

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Is it too early to start talking about the 2012 presidential election? Not for political junkies like me! Bobby Jindal, governor of Louisiana, got his “campaign” off to a rousing start last night by delivering the Republican response to President Barack Obama’s address to Congress and the nation.

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With the economy falling deeper into a black hole every day, it’s no wonder small employers are dumping their health benefit plans in a desperate attempt to keep from sinking in the storm. This accelerating trend leaves not only uncovered employees in the lurch, but independent agents as well, who often count on group health sales to keep their own firms in the black.

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A global market intelligence firm is charging that the Independent Insurance Agents and Brokers of America is lobbying against federal regulation out of fear that a national oversight system would facilitate more direct sales via the Web and telephone, thus bypassing its members. Are they serious or delirious?

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The admission by baseball star Alex Rodriguez that he took performance-enhancing drugs is symptomatic of a culture in which frauds are only sorry they got caught, mere “mistakes” (a euphemism for “criminal acts”) are committed, and all one must do to atone for such sins is apologize. In this “anything goes” atmosphere, it’s no wonder many people feel no compunctions about cheating their insurer on a claim.

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After I hailed the benefits of enterprise risk management in my Feb. 9 blog, suggesting that a chief risk officer might have helped AIG avoid some of the systemic exposures that nearly destroyed the company (and our economy along with it), readers took me to task for failing to note that such an individual actually was on the case, and what that might mean for ERM’s validity.

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While their ads insist that “Like a good neighbor, State Farm is there,” in Florida the carrier is behaving more like Clint Eastwood’s character in “Gran Torino”—brandishing a deadly weapon and warning everyone to get off his lawn.

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The “holodecks” of the post-Captain Kirk “Star Trek” universe–high-tech pleasure centers that create the illusion of doing just about anything you wish without risk of harm–sound a lot like the imaginary world in which insurers and investors, in blissful ignorance, traded credit default swaps on worthless securities backed by reckless subprime mortgages without fear of any nasty consequences.

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My biggest concern about the stimulus package being debated to death in Congress is not that it won’t help jumpstart the moribund economy over the next couple of years, but that so many will be disappointed it’s not a miracle elixir, they’ll lose confidence in the government’s ability to make a difference, and prolong the recession by sitting on their cash.

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During his visit this afternoon to NU’s editorial headquarters here in Hoboken, New York Insurance Superintendent Eric Dinallo raised an interesting possibility to help fuel a reborn Insurance Exchange in the Empire State–the trading of credit default swaps, which is not as crazy as it might sound at first blush!

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