Insurance companies had ridden a roller-coaster ride since the beginning of the century. In 2005, insurers claimed to have "lost" $40 billion in claims from Hurricane Katrina alone. From a simpleton's point of view (such as the one writing this blog), it seemed curious as to how those could be considered "losses". After all, wasn't that the business they were in? They collect money from premium holders, hang on to that money, and pay it out when premium-holders file claims. Apparently the insurance companies don't see it that way: all the money they collect from premium-holders is evidently considered theirs, to do with as they please. Then they raise the cost of insurance, especially to those who have filed claims! It seems the perfect business model: I'll sell you something and claim to protect you in the event of a catastrophe. But, when the catastrophe strikes, I'll refuse to pay your claim - or, if I do pay your claim, I'll raise your rates to cover my "losses". Should't insurance premiums be put in some kind of trust fund and used only to pay claims as necessary??
Social Security had always been called an "insurance" program. Even Time magazine used that term in a cover story regarding the government's plan to phase out Social Security and replace it with private retirement investments. Again, the simpleton's approach was easy: if you don't need financial assistance when you retire, you shouldn't get it. Social Security should be just like any other insurance. You pay car insurance, for example, and hope you never have an accident. If you never file a claim, you don't get your premiums back. Those premiums supposedly went into a pool to help pay the claims of those who needed it. On Thursday, January 24, 2008, Article II was introduced as a resolution to "modify Social Security to ensure more social equality". The whole idea was simple: everyone paid into the plan, but only those who truly needed it would ever file a claim and collect. It seemed ludicrous that millionaires with two luxury cars in the garage and two vacation homes needed a paltry Social Security check to survive. Their argument, of course, was "I paid into it; I am entitled to get it back." In many cases these were the same people who opposed all kinds of other government entitlements, such as welfare for single mothers.
The more viable argument was, "Everyone pays into the pool, and that enables our society to share our wealth with those less fortunate."
But just as insurance companies considered paying out legitimate claims :losses", Social Security recipients with millions of dollars in the bank considered it their birthright to get a monthly check for as long as they lived, which helped them pay the property taxes on their Florida time share. Experts predicted that as many as ten major hurricanes could strike the U.S.A. in 2006, and insurance companies braced for more billion-dollar losses. Instead, there were no major hurricanes in 2006, and St. Paul Travelers Insurance saw third-quarter profits rise to $1.04 billion. The company had paid out only $10 million in claims in 2006, compared with $1.01 billion in claims after Katrina. The rest of those pumped-up premiums were kept and premium-holders received no discounts or rate reductions because there were no hurricanes. A St. Paul Travelers spokeswoman said, "While a below-average hurricane season is certainly a welcome change from the past several years, and perhaps may have some impact upon the market in which we participate, it by no means diminishes our need to properly account for and manage our catastrophe exposures." Allstate posted a $1.55 billion "loss" in 2005 after Katrina, then recovered nicely in 2006 with a third-quarter profit of $1.16 billion. Again, no premium holders who had seen their rates rise after 2005 saw a similar rate decline in 2006. The insurance companies kept the money, paid its executives massive salaries and bonues, built new chrome-and-glass monoliths to themselves, bought, sold or merged with other companies, and pretty much gorged themselves on fiscal recklessness. When the unseasonable hurricane struck the east coast of the United States in March, 2008, the insurers were unprepared for such major devastation. O.U.T.R.A.G.E. was dealing with this event, trying to force those insurers who still were in operation, to pay their insureds' legitimate claims. It was a grueling task, and a fiscal nightmare, especially since so many of the insurance company headquarters had been obliterated on January 17, 2008.
Government regulation of insurance companies was as important as government management of Social Security.
The O.U.T.R.A.G.E. panel chairing the committee regarding this issue was hard-pressed to come up with a compromise that would allow free enterprise to work effectively while still minimizing the callous disregard for frugal corporate business management. Powell and McCain had the same idea almost at the same instant: H. Ross Perot would know how to fix this!
Perot had immediate solutions: he agreed with the resolution to modify Social Security. "After all," he said, "no one knows where they'll be by the time they're ready to retire, especially in these times of volaltile business practices where fraudulent accounting practices, pension fund thefts, and irresponsible management abounds. Too many people end up without any security blanket at the end of their careers, and often due to no fault of their own." Perot blasted the corporate community for its avarice, insensitivity, and corruption. Why not, Perot suggested, turn over all Social Security revenues to reputable insurance companies and allow them to invest it as they invest their own incomes? They could take a modest fee for such services, provide investment instruments, and make Social Security financially sound for generations to come. "The government isn't very good at investment," barked Perot. "Let the professionals handle it, yet make them responsible to the government, which - in this new case - is the people. They can't use these funds to line the pockets of their upper-echelon executive officers; they must be willing to do all this for the public good." It sounded simply enough....
Social Security had always been called an "insurance" program. Even Time magazine used that term in a cover story regarding the government's plan to phase out Social Security and replace it with private retirement investments. Again, the simpleton's approach was easy: if you don't need financial assistance when you retire, you shouldn't get it. Social Security should be just like any other insurance. You pay car insurance, for example, and hope you never have an accident. If you never file a claim, you don't get your premiums back. Those premiums supposedly went into a pool to help pay the claims of those who needed it. On Thursday, January 24, 2008, Article II was introduced as a resolution to "modify Social Security to ensure more social equality". The whole idea was simple: everyone paid into the plan, but only those who truly needed it would ever file a claim and collect. It seemed ludicrous that millionaires with two luxury cars in the garage and two vacation homes needed a paltry Social Security check to survive. Their argument, of course, was "I paid into it; I am entitled to get it back." In many cases these were the same people who opposed all kinds of other government entitlements, such as welfare for single mothers.
The more viable argument was, "Everyone pays into the pool, and that enables our society to share our wealth with those less fortunate."
But just as insurance companies considered paying out legitimate claims :losses", Social Security recipients with millions of dollars in the bank considered it their birthright to get a monthly check for as long as they lived, which helped them pay the property taxes on their Florida time share. Experts predicted that as many as ten major hurricanes could strike the U.S.A. in 2006, and insurance companies braced for more billion-dollar losses. Instead, there were no major hurricanes in 2006, and St. Paul Travelers Insurance saw third-quarter profits rise to $1.04 billion. The company had paid out only $10 million in claims in 2006, compared with $1.01 billion in claims after Katrina. The rest of those pumped-up premiums were kept and premium-holders received no discounts or rate reductions because there were no hurricanes. A St. Paul Travelers spokeswoman said, "While a below-average hurricane season is certainly a welcome change from the past several years, and perhaps may have some impact upon the market in which we participate, it by no means diminishes our need to properly account for and manage our catastrophe exposures." Allstate posted a $1.55 billion "loss" in 2005 after Katrina, then recovered nicely in 2006 with a third-quarter profit of $1.16 billion. Again, no premium holders who had seen their rates rise after 2005 saw a similar rate decline in 2006. The insurance companies kept the money, paid its executives massive salaries and bonues, built new chrome-and-glass monoliths to themselves, bought, sold or merged with other companies, and pretty much gorged themselves on fiscal recklessness. When the unseasonable hurricane struck the east coast of the United States in March, 2008, the insurers were unprepared for such major devastation. O.U.T.R.A.G.E. was dealing with this event, trying to force those insurers who still were in operation, to pay their insureds' legitimate claims. It was a grueling task, and a fiscal nightmare, especially since so many of the insurance company headquarters had been obliterated on January 17, 2008.
Government regulation of insurance companies was as important as government management of Social Security.
The O.U.T.R.A.G.E. panel chairing the committee regarding this issue was hard-pressed to come up with a compromise that would allow free enterprise to work effectively while still minimizing the callous disregard for frugal corporate business management. Powell and McCain had the same idea almost at the same instant: H. Ross Perot would know how to fix this!
Perot had immediate solutions: he agreed with the resolution to modify Social Security. "After all," he said, "no one knows where they'll be by the time they're ready to retire, especially in these times of volaltile business practices where fraudulent accounting practices, pension fund thefts, and irresponsible management abounds. Too many people end up without any security blanket at the end of their careers, and often due to no fault of their own." Perot blasted the corporate community for its avarice, insensitivity, and corruption. Why not, Perot suggested, turn over all Social Security revenues to reputable insurance companies and allow them to invest it as they invest their own incomes? They could take a modest fee for such services, provide investment instruments, and make Social Security financially sound for generations to come. "The government isn't very good at investment," barked Perot. "Let the professionals handle it, yet make them responsible to the government, which - in this new case - is the people. They can't use these funds to line the pockets of their upper-echelon executive officers; they must be willing to do all this for the public good." It sounded simply enough....
posted by Bushwacker! at 7:16 AM
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