AIG "exploited a huge gap in the regulatory system"

by: robinia

Wed Mar 18, 2009 at 21:16:48 PM EDT

Eschaton points us to a Newsweek article that lays out just how closely the insurance side of AIG resembles a house of cards. That's the "sound business" that will pay back the US taxpayer that Liddy was talking about saving at today's congressional hearings.

Monday I wrote about AIG and NYS regulators. The Michael Hirsch article in Newsweek targets reinsurance schemes between various divisions of the company as a source of additional under-priced risk.  This part was not very comforting:

One early sign of trouble came when Christian Milton, AIG's vice president of reinsurance from 1982 to 2005, was convicted last year in federal district court of conspiracy, securities fraud, mail fraud and making false statements to the Securities and Exchange Commission.

Then, this part was even a bit scarier:

Sen. Richard Shelby during hearings last week raised questions about whether AIG's insurance side was as sound as the company maintained it to be. In response, Eric Dinallo, New York state's superintendent of insurance, said he thought "the operating companies of AIG, particularly the property companies, are in excellent condition." But Dinallo admitted he had examined only 25 of the domestic AIG companies and added: "There are problems with state insurance regulation. I've been a proponent of us revisiting it."

Hmm. Convicted criminals in charge, overseen by Albany regulators who admit they are probably not up to the job.  Could be some problems there, ya think?

Thought For The Day

by: phillip anderson

Wed Mar 18, 2009 at 11:43:10 AM EDT

You Know It's Bad When ...

Insurance companies say they have no choice but to honor contracts, and banks are pleading that their assets will be worth more if you just give them a little time.

For anyone, especially in business, who has tried to make those same arguments to insurers and bankers, to no avail, it's painfully rich.

We live in interesting times.

AIG and Insurance in NY

by: robinia

Mon Mar 16, 2009 at 21:51:02 PM EDT

That move has Simon wondering here what ever happened to that special deal that Governor Paterson gave AIG just before the first Federal bailout... you remember, the one where they didn't have to abide by the normal regs, and the gambling side of the corp could borrow 20 billion from the side that handles your health insurance?  Anybody got the follow-up file on that?

So, Simon's question got me pondering something even older than that-- a special bill that the NYS Senate passed, without a sponsor, back in the bad old Bruno days.... it would have made it illegal to disclose the names of any parties that were unearthed in an insurance dept. investigation of any wrongdoing.... you know, like, the stuff Andrew is asking for by subpoena would have been illegal to disclose had it become law...

AIG Failure, Seward's Complicity In Insurance Company Shenanigans, Barber Demands Answers

by: robinia

Fri Oct 03, 2008 at 09:38:11 AM EDT

This bill, S.8446/A. 11432 would make these documents exempt from freedom of information laws, disclosure under public officers law, or subpoena.

It's passed through the Senate (with no sponsors, which, according to NYPIRG's Blair Horner, "is how you know a bill really stinks")

Robert questioned this move to let insurance companies count on the results of investigations being kept "confidential" (secret).  His post  features this bizarre quote from the bill's "justification"-- that justice will be served by making insurance companies less likely to hide malfeasance from the authorities, by ensuring them that the authorities would keep that malfeasance secret from the public.

Regulated persons and other entities are sometimes reluctant to provide the Superintendent with proprietary or other information with respect to an examination, investigation or inquiry for fear that this information may become publicly available pursuant to FOIL, a subpoena, or some other disclosure method. As a result, the Superintendent`s ability to identify potential problems concerning these regulated persons and entities, and to implement plans of corrective action in response thereto, has been hindered. This bill addresses this concern by making correspondence, memoranda and other documents concerning or arising out of an examination, investigation or inquiry presumptively confidential, unless the Superintendent deems disclosure to be in the interest of the policyholders, shareholders or the public.

Wow.  Roatti called this in another post a "line in the sand."  Righto, Roatti.  Now, with 20-20 hindsight, you have to wonder-- what were they working on covering up about AIG?

Think that they didn't know about it?  Well, back then, when I called the NYS Dept. of Insurance about this bill, the Deputy Commissioner of Insurance assured me that this move toward a different kind of regulation was absolutely necessary to ensure the competitiveness of NYS in keeping large, multinational insurance companies headquartered in NY.  That would be, I assume, AIG.  He also referred to a Blueprint for 21st Century Regulation of Financial Services, what was known at the time as the Paulson Plan, which stressed the need to deregulate financial services to maintain "global competitiveness" of US companies.   Irony, irony.

Who has been dogging this all along?  Don Barber.  Check out his hard-hitting news release on the subject-- and Insurance Committee Chair Seward's complicity-- on the flip.

Money Matters-- Now's the Time Barber Needs Your Help!

by: robinia

Wed Jul 09, 2008 at 13:42:54 PM EDT

While Golisano throws his weight and money around in an "uncoordinated" effort to help whomever he likes best, and Spitzer contributes a big 5K (is that half a date w/his high-end whores?) to the Upstate Rural Caucus (as per Robert's post below), the true reformers are out there on their own.  They have only us to depend on, because they will only speak for us.

Please read this appeal from Barber Campaign Strategist Amy Little (yeah, she is the one who worked with the Hall campaign when the establishment Dems didn't think he stood a chance, either).  She makes an excellent case for how helping Don Barber make it is important for any reform-minded NYer.  More follows from the Communications Director.  They need our help-- cash in whatever increment you can manage this week-- but, also to get the word out.  We are up against a lot-- let's all pull together now!

Dear Fellow Take New Yorkers:

In NY's 51 district, Don Barber is running against Republican Jim Seward, Bruno's Majority Whip, Chair of the Insurance Committee, who has gone unopposed for 22 years and gets most of his money from the insurance industry. Needless to say, if we want to advance health care issues in NY, we need to get rid of Seward.

Don is a true progressive. A farmer, successful small business owner, and 6-term Town Supervisor, Don is an amazing person with unequivocal integrity, honesty and openness. He is running another one of those exciting grassroots campaigns and depends on those individuals who understand the need for change to help.

This Friday, July 11 (just 2 days from now), is the close of the fundraising period for NY state candidates. Please consider making a contribution before Friday at http://barberforsenate.com. Know that your contribution will help win a campaign that is running against an entrenched Republican with big bucks from the Insurance Industry, which also has big bucks.

Just think, you can participate in getting rid of the Republican iron fist in NY and the Insurance Industry's best friend in the Senate, as well as advance any issue you care about, by helping get Don Barber elected.

Several Take NY'ers are helping in one way or another on this campaign because taking this seat will powerfully disrupt the business as usual in New York's policy making.

Anyone else want to comment about Don Barber?

Amy Little

Don Barber believes that taking money from the insurance industry while chairing the Senate Insurance Committee is unethical, plain and simple. By blocking regulation of HMO rates, Seward has allowed rates to rise 79% since 2001. Think of how much money Jim Seward has made for the insurance companies in that time, and how much the suffering of New Yorkers has increased as a result. This is about ethics, but it's also about believing that health care is a human right, not something the well-off can buy while the rest of us are denied care every day.

Don is fighting for all of us, and he deserves our support.

Do it now, ActBlue, or the Barber website

Public Hearing on Health Care: New York City, 10/30

by: greenheron

Wed Oct 24, 2007 at 09:37:57 AM EDT

Albany, N.Y. (October 22, 2007) - The New York State Insurance Superintendent Eric Dinallo and New York State Health Commissioner Richard F. Daines, M.D., in connection with Governor Eliot Spitzer's "Partnership for Coverage" initiative will hold the fourth in a series of public hearings to obtain input from New Yorkers on ways to expand health insurance coverage and improve the health care system.

When: October 30, 2007

Time: 9:00 a.m. to 8:00 p.m.

Where: The Grand Ballroom at the New Yorker Hotel, 481 8th Avenue (corner of 34th and 8th), New York, New York.

NY State Senators are "Sicko" of Insurance Industry Price Gouging

by: ElanaDMIBlog

Mon Jul 23, 2007 at 17:35:41 PM EDT

Like insurance rates, health insurance rates for small businesses and individuals used to be subject to state Insurance Department approval before they went into effect. But the law expired in 2000, with devastating but predictable results. Premiums for small businesses soared 21 percent. At the same time, the percentage of their revenue that HMOs paid medical providers declined. As a result, HMOs, which provide more than one third of all private health insurance coverage in New York, and a substantial percentage of Medicaid and Medicare coverage, saw their profits shoot up 93 percent between 2001 and 2005. Meanwhile, New York's small businesses struggled with budget-busting increases, leaving some unable to continue providing coverage to employees at all.

What's the alternative to the onerous insurance burden on New York's small businesses and consumers? California's experience with insurance reform provides some insight into how improved public oversight can introduce transparency and accountability to the insurance marketplace, reining in runaway premiums.

Read the rest here.
For more on solutions to insurance industry price gouging check out our Marketplace of Ideas event with Harvey Rosenfield of The Foundation for Taxpayer and Consumer Rights.