Have I missed a story about what happens to the funds formerly paid out as contingent commissions? Are base commissions being increased? I haven\’t heard a word about that, but as an employee of an operation that stoically announced they\’d no longer accept such payments, I\’m still wondering where that money is going, as said employer cuts commissions to those so compensated, and hands out 2% raises to the salaried staff…
This is not a case of contingent commisions. It is the override paid to only a few large brokerages and has nothing to do with profitablity. I wish writer of this article would get it right! Linking contingent commisions to what these crooks did is a total misrepresntation of what occured.
A quick for-instance, I just received a State Farm estimate from a client.
Now check out this summary page, and see if State Farm can help the public understand it is NOT a synthetic construction \”estimate\”;
Summary For Hurricane
$10,103.19 Line Item Total
$114.67 6.000% Materials Sales Tax __________
$10,217.86 Replacement Cost Value
$ 2,607.44 Less Depreciation
__________
$ 7,610.42 Actual Cash Value
$ 761.04 Overhead @ 10%
$ 761.04 Profit @ 10%
__________
$ 9,132.50 Actual Cash Value W/O&P
$ 2,272.00 Less Deductible
__________
$ 6,860.50 Net Actual Cash Value Payment
Two (hard-to-detect) synthetic / false replacement costs – construction estimation points…
1. Contractor overhead and profit was NOT applied to the ACTUAL projected loss replacement – reconstruction value sum, ($10,217.86), but to the DEPRECIATED $7,610.42 sum. Hmmmm…
2. The estimated business profit value is THE SAME as the business overhead factor.
Since anticipated (10% profit) can only be measured against the whole (hard costs and overhead) construction contractor investment risk of a project, a SYNTHETIC / FASLE profit amount exists. Again, Hmmmm…
Builder-General-Primary Contractor AND Subcontractor business overhead and profit values, accounted for in premium values, is underestimated / underpaid TWICE!
Does that sound like the \’illegal windfall\’ principle that is referred to in the following regulatory document?;
__________
\”–Premiums charged must not be excessive for the risks to which they apply.
Under a replacement cost policy, the liability limits of the policy and the premium paid by the insured are determined on the basis of the replacement cost of the structure.
The value of contractor´s overhead and profit, as well as sales tax on building materials, has been included in the limit of liability for which the insured has paid premium.
If the insurer in determining actual cash value excludes costs that are included in the determination of liability limits, on which the insured´s premium is based, the insurer reaps an ILLEGAL WINDFALL BECAUSE the insurer receives premium on insurable values for which loss may never be paid.\”
Charging someone dollars for something premium wise (historical construction replacement costs of a structure) and then NOT voluntarily disclosing to untold tens-of-thousands of claimant clients what they are actually owed as base replacement cost values…is called what?
Hint–\'[Receiving] premium on insurable values for which loss may never be paid\’
= Taking dollars from consumers you have no intention of repaying to them, no?
And what is THAT financial transaction called?
Care to see more claim loss/construction estimation rigging schemes?
Talk about ripping people off. How does the government deserve $40,000,000 from Ace on this.
Have I missed a story about what happens to the funds formerly paid out as contingent commissions? Are base commissions being increased? I haven\’t heard a word about that, but as an employee of an operation that stoically announced they\’d no longer accept such payments, I\’m still wondering where that money is going, as said employer cuts commissions to those so compensated, and hands out 2% raises to the salaried staff…
Oh, I\’m sure they will show up as reduced insurance premiums to the buying (voting) public, just as the good AG said.
This is not a case of contingent commisions. It is the override paid to only a few large brokerages and has nothing to do with profitablity. I wish writer of this article would get it right! Linking contingent commisions to what these crooks did is a total misrepresntation of what occured.
4-30-2006
There are MANY ways insurers can underpay claims.
A quick for-instance, I just received a State Farm estimate from a client.
Now check out this summary page, and see if State Farm can help the public understand it is NOT a synthetic construction \”estimate\”;
Summary For Hurricane
$10,103.19 Line Item Total
$114.67 6.000% Materials Sales Tax __________
$10,217.86 Replacement Cost Value
$ 2,607.44 Less Depreciation
__________
$ 7,610.42 Actual Cash Value
$ 761.04 Overhead @ 10%
$ 761.04 Profit @ 10%
__________
$ 9,132.50 Actual Cash Value W/O&P
$ 2,272.00 Less Deductible
__________
$ 6,860.50 Net Actual Cash Value Payment
Two (hard-to-detect) synthetic / false replacement costs – construction estimation points…
1. Contractor overhead and profit was NOT applied to the ACTUAL projected loss replacement – reconstruction value sum, ($10,217.86), but to the DEPRECIATED $7,610.42 sum. Hmmmm…
2. The estimated business profit value is THE SAME as the business overhead factor.
Since anticipated (10% profit) can only be measured against the whole (hard costs and overhead) construction contractor investment risk of a project, a SYNTHETIC / FASLE profit amount exists. Again, Hmmmm…
Builder-General-Primary Contractor AND Subcontractor business overhead and profit values, accounted for in premium values, is underestimated / underpaid TWICE!
Does that sound like the \’illegal windfall\’ principle that is referred to in the following regulatory document?;
__________
\”–Premiums charged must not be excessive for the risks to which they apply.
Under a replacement cost policy, the liability limits of the policy and the premium paid by the insured are determined on the basis of the replacement cost of the structure.
The value of contractor´s overhead and profit, as well as sales tax on building materials, has been included in the limit of liability for which the insured has paid premium.
If the insurer in determining actual cash value excludes costs that are included in the determination of liability limits, on which the insured´s premium is based, the insurer reaps an ILLEGAL WINDFALL BECAUSE the insurer receives premium on insurable values for which loss may never be paid.\”
http://www.tdi.state.tx.us/bulletins/b-0045-8.html
__________
Charging someone dollars for something premium wise (historical construction replacement costs of a structure) and then NOT voluntarily disclosing to untold tens-of-thousands of claimant clients what they are actually owed as base replacement cost values…is called what?
Hint–\'[Receiving] premium on insurable values for which loss may never be paid\’
= Taking dollars from consumers you have no intention of repaying to them, no?
And what is THAT financial transaction called?
Care to see more claim loss/construction estimation rigging schemes?
rogerpoegc@yahoo.com