Vulture Culture: Dirty Deals, Unpaid Claims, and the Coming Collapse of the Insurance Industry

Vulture Culture: Dirty Deals, Unpaid Claims, and the Coming Collapse of the Insurance Industry

Vulture Culture: Dirty Deals, Unpaid Claims, and the Coming Collapse of the Insurance Industry

Vulture Culture: Dirty Deals, Unpaid Claims, and the Coming Collapse of the Insurance Industry

Excerpt

The insurance industry is one of the backbones of the U.S. economy, yet it is now in danger of total collapse. The previously quiet industry has been hit with a perfect storm—a convergence of serious problems that have been building for years and came together at one time with high media coverage. The results have become disastrous for insurer and insured alike.

The problems include rogue executives who put themselves and their shareholders ahead of the policyholders' best interests; insurers who lack sufficient claim reserves to pay claims when a catastrophe arises; an inadequate audit system to monitor insurer practices; and, in some cases, out-and-out reckless conduct or worse on the part of insurers, leaving many innocent claimants, policyholders, and/or employees with nothing when a company is declared insolvent and liquidated.

There are also other troubling issues, such as uncontrolled takeovers of domestic insurers by international or foreign corporations; rapidly increasing general insurance costs and skyrocketing healthcare and medical malpractice premiums; and reckless delay or denial of legitimate claims. There are questionable unregulated offshore reinsurers (reinsurers that take a major part of the risk from primary insurance companies) as well as insurance executives who are convicted of bid rigging, fraud, and conflict of interest, as well as being accused of flat-out greed.

Good management, good executives, and good regulation can save the insurance industry. Regulation may in fact be the ultimate answer to the industry's problems. In 2007, the American Bar Asso-

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