Second, the Nationwide-Nationwide deal is part of a wider story about governance and cultural problems at top levels of the financial services industry. These are also relevant to the current meltdown.
Thanks to Bloomberg for another example of informative, tough reporting.
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nice one, Dean. But in regards to your claim of a recent "cultural shift," when was the insurance industry not predatory?
Posted by edward ericson on Tue 2 Dec 2008 at 07:32 AM
Bloomberg's work, along with that of others, trace a shift to the early 1990s when Allstate brought in McKenzie & Co. to restructure claims-handling. See the Bloomberg story (link above) and other material in my original review of it last year, particularly a BusinessWeek story on the matter: http://www.cjr.org/the_audit/the_insurance_hoax.php. This was an important moment for insurers and their customers.
--Dean
Posted by Dean Starkman on Tue 2 Dec 2008 at 10:22 AM
Yep, read it. It's important work. Still, I recall some crazy mid-1980s propaganda blitz by insurance companies complaining about unfounded lawsuits & etc. The reason for it--obvious even then--had everything to do with poor management by the insurance co.s (lower-than-projected investment returns, etc.) and very little to do with rapacious ambulance-chasers. In CT, where I lived, regulators folded. Among the changes were cutbacks to worker's compensation that have reverberated to this day--one change allowed a trucking company to order its driver into a vehicle with bad brakes and a gas leak inside the cab, which resulted in the driver being burned alive. Under the law, the company (and its insurer) avoided all liability. This is but one example, among many I could cite, evidencing insurance industry predation which predates Allstate's claims-handling restructure. Carry on.
Posted by ed ericson on Tue 2 Dec 2008 at 05:53 PM