glen-martin
Inspires confidence in regulators, doesn't it?
posted Wednesday, 9 February 2005
<analogy on>
A hit man knocks off 5 people over a couple of years, getting paid $10K per pop. On the last of the hits, he's caught, and the DA grants him complete immunity from prosecution for all 5 hits for a guilty plea on one count of accepting a $10K bribe. He even gets to keep the $40K he's got left over.
<analogy off>
Get real, you say?
So Marsh & McLennan does a deal in a case alleging insurance rate rigging, in which their customers allegedly paid higher premiums because of bogus comparison quotes constructed by Marsh brokers in cahoots with the insurer whose bid they favored. And they were doing this for years.
The settlement? Marsh is paying 1 years worth of kickbacks "contingent compoensation" they received from the insurer for the practice. $850 million.
Now if the insurer is offering $850M, the insurer must have made more than $850M in increased premiums. So the insured (collectively) must have paid that much extra. Stands to reason. Multiply that by the several years the practice was going on. So Marsh winds up paying only a fraction of the real damages suffered by their customers, and only a fraction of the bribes "contingent compensation" they collected. Marsh stock us up 4.5% on the news. (Duh!)
Insurance fraud used to be about the insured, but seems to me insurance fraud is much more lucrative for the insurer.
A hit man knocks off 5 people over a couple of years, getting paid $10K per pop. On the last of the hits, he's caught, and the DA grants him complete immunity from prosecution for all 5 hits for a guilty plea on one count of accepting a $10K bribe. He even gets to keep the $40K he's got left over.
<analogy off>
Get real, you say?
So Marsh & McLennan does a deal in a case alleging insurance rate rigging, in which their customers allegedly paid higher premiums because of bogus comparison quotes constructed by Marsh brokers in cahoots with the insurer whose bid they favored. And they were doing this for years.
The settlement? Marsh is paying 1 years worth of kickbacks "contingent compoensation" they received from the insurer for the practice. $850 million.
Now if the insurer is offering $850M, the insurer must have made more than $850M in increased premiums. So the insured (collectively) must have paid that much extra. Stands to reason. Multiply that by the several years the practice was going on. So Marsh winds up paying only a fraction of the real damages suffered by their customers, and only a fraction of the bribes "contingent compensation" they collected. Marsh stock us up 4.5% on the news. (Duh!)
Insurance fraud used to be about the insured, but seems to me insurance fraud is much more lucrative for the insurer.
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