Iconoclast b Y Ken bro WnLee, CPCU
PUTTING RUMORS TO REST
Finding the Truth in the Industry
A number of newspapers are using a “truth meter” approach to the procla- mations of national and local politicians, rating what has been stated as truth, mostly true, half true, mostly false, or so false it is rated “pants on fire.” There are a good many statements made about and by the insurance
industry which ought to undergo such metering as well. In some cases, it is advertisements in the mainstream or industry media that should be tested; in most it is political
statements that warrant a veracity check.
My old Irish father often said, “If you believe everything you hear, you will eat ev-
erything you see.” While his comments were primarily directed toward some delicacies
such as snails, tripe, and edible weeds, the bodacious eaters on the Travel Channel would
have one believing that one can thrive on everything from roaches and rats to monkey
tail stew. What the poor people in famine-struck areas of the world eat would nauseate
most of us, but it may be all they have. However, if they consumed the typical American
diet of hot dogs, bacon burgers, and cola, then it would probably kill them just as it is
killing us. The government is constantly updating what we need for a good nourishing
meal, and it surely is not that. Its recommendations rate a “mostly true.”
However, why do we need the government to tell us what to eat or not eat? Are we like
the tour guide my wife and I had on a Scandinavian tour who said, “Vee are vaiting for our
government to tell us vut to tink?” I could not imagine an American saying, “We are wait-
ing for Washington to tell us what to think.” That would be like waiting for a jury to tell the
court what is truth. One does not find truth in court cases; one finds only what facts may
influence a decision when the case is adversarial. If it was not adversarial, then it would not
be in court. On the contrary, we need to tell Washington what to think or do. Because of a
lack of action recently, we may need to do more than tell them. We need to remind the gov-
ernment that most of the time its pants are on fire, and it needs to start seeking the truth.
time even getting around to extending the
National Flood Insurance Program (NFIP),
at least beyond a few months, imagine how
slow the industry would be if it had federal
rather than state regulation. At least with
most state regulators the prospect of approaching reelections keeps them busy,
usually benefiting both insureds and insurers. Insureds obtain some protection against
unjust rates, and insurers receive a few perks
that their lobbyists have been seeking.
The benefit of state regulation is evident
in our system of adversarial law. Locate
any court decision in any given state, or
even any federal jurisdiction, and you will
find an exact opposite decision in another
state or jurisdiction. Even when the U.S.
Supreme Court pontificates, many states
still go their own way. State jurisdiction
over employee benefit programs subject
to the Employee Retirement Income Security Act (ERISA) was abolished in favor of
the federal courts. Has it made employee
benefits disputes better or claims easier to
resolve? Different approaches by different
state courts can be viewed as the American way of jurisprudence. Any suggestions
that Congress and federal courts can do
it better rates a “half truth” to “probably
false” on my veracity meter.
1 Federal insurance regulation is preferable to state regulation: probably false.
Consider, for example, the (currently inactive) movement to have the federal government
assume regulation of insurance. It was the 1945 McCarran-Ferguson Act that gave the states
the right to regulate insurance—as long as they did so. They have. Since Congress has a hard
2 “Flood” should be a covered peril un-
der homeowners’ forms: probably true.
One subject that is likely to raise its pretty
head again following Hurricane Irene is the
notion of making “flood” a standard peril
under homeowners and commercial property forms. Time after time the media shows
us blubbering homeowners or shopkeepers
with their stuff piled in the gutter professing
ruination as they had no flood insurance.
Well, they did not think they were in a flood
plain. Neither do I, but I want to buy flood
insurance. I would prefer including that
covered peril in my homeowners’ policy, as
it would then include additional living expense, which an NFIP policy does not.
We all certainly would pay a bit more
for our property coverages if flood was
Iconoclast p. 44 A