Industry Whistleblower Reveals Truths Behind ‘Historic’ Events

Insurance is Fun! has conducted an investigation into the true story behind several key events in insurance history. The source is referred to only as Deep Form. While the full interview will not be released until next month, Insurance Journal was given an edited excerpt:

Why step forward now? Why not years ago?

Deep Form: Let’s just say the old memory ain’t what it used to be. Figured if I can’t remember why I’m standing in the bathroom, I better get this out. Maybe it’s just time for the cover-up to end.

Cover-up is a strong word. An example?

DF: You’ve heard of the Montrose liability case, right? The one that we claimed required a complete rewrite of the first page of the standard CGL forms? Made up the whole thing, then planted the false details in court records.

If you can fake an entire court case as a way to make otherwise unnecessary changes that favor carriers in a standard liability form, what else could you do?

DF: Oh, pretty much whatever we wanted. Most state regulators pay no attention to the fine print in our filings anyway, so it became kind of fun to see just how much we could get away with. For example, remember that magazine article you wrote after ISO made all those strange golf cart changes in the homeowners forms, where you laughingly blamed it all on an actuary’s retired mom who lives in a Florida condo?

That was meant to be a satire.

DF: Hah! It was his aunt, not mom. We had to endure an entire internal investigation over who leaked that one.

Then there was the fake tort liability crisis and that incredible fire class rate manual that singe-handedly laid the foundation and justification for nearly the entire package policy movement. Ah, the 80s…good times!

Fake crisis?

DF: Oh, come on. We testified in every state that if something radical wasn’t done pronto about tort reform, the entire liability insurance industry was going to collapse. Coverage would be unavailable at any price. Businesses would close, contractors fail, and economies collapse unless we got major tort reform! And what did we get for all our trouble? Bupkis! And what happened? Nothing! The liability market skies amazingly cleared, and we went on to one of the great economic resurgences in history. It was our biggest failure.

And the fire class rate manual? Based on a faulty algorithm some actuary dreamed up while on a Timothy Leary trip.

Why hasn’t any of this come out?

DF: As Peter Lewis might say, “What have you been smoking?” Need I mention Wall Street? Banks? Claims-made liability forms for the standard market?

Folks want to believe more intelligent people must be in charge somewhere? As any con man knows, just keep acting like you know what you are doing and when questioned, simply expand the lie to the point no one can possibly believe you would make it up? Need I mention Bernie Madoff?”

Give us one example of “expanding the lie.”

DF: Geico, Aflac and Allstate — they don’t exist. They are all fronts for a reinsurance facility located in the Marshall Islands. Used to be real companies, but went under years ago. All three are now actually kept on life support by an advertising firm looking to salvage work for three rejected college mascots. I mean, seriously: a duck, a lizard and a guy named mayhem? Those don’t just scream “three martini lunch?”

Oh, and “invisible glass?” Always been my favorite. Think on it: How do you know you have it, how do you really know it’s broken, and how do you know the carrier replaced it? It’s the “Emperor has no clothes” with an insurance premium attached. And people buy it!

Ya’ gotta’ love this business!

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