Pocketing Premiums, Padding Profits & Passing Out Big Salaries and Bonuses

Pocketing Premiums, Padding Profits & Passing Out Big Salaries and Bonuses

While families, business owners, and community leaders were still digging their way through Katrina's rubble, insurance executives focused on pocketing policyholder premiums, padding corporate profits, and passing out big salaries and bonuses.

Pocketing Premiums, Padding Profits
Insurance company memos specifically directed employees to deny American policyholders wind damage claims for properties on which so much as a drop of water had been involved in the property damage. The insurance companies sent a $23 billion bill to the federal government's National Flood Insurance Program (NFIP). The amount of this $23 billion that stems from claims that the insurance companies willfully and fraudulently submitted to the federal government has yet to be determined.

What has been determined, however, is the billions of dollars in profit that the property insurance industry has publicly reported. In 2005--the year that Katrina hit the Gulf Coast, the Insurance Industry Institute reported te property insurance industry had a net gain of $19.5 billion--roughly the amount sent to the federal flood insurance program. That sectors total profit for the years was $44 billion. For 2006, the Institute reported $64 billion in profits for the industry. For 2005 and 2006 combined, property insurance companies cleared--after taxes and after submitting an untold number of fraudulent flood claims to the federal government --$108 billion in net profit.

Passing Out Big Bonuses and Salaries
ed_rust_stfarm_ceo.jpg
Ed Rust, Jr., State Farm
CEO and Chairman
photo from
State Farm website

State Farm
The Associated Press reported that State Farm's board of directors rewarded Ed Rust, Jr., chariman and CEO, with a $5.26 million raise in 2006, the year after Katrina devastaed the Gulf Coast. "He earned $11.66 million in 2006 with a base salary of $1.77 million and results-based bonus of $9.89 million."
ed_liddy_allstate_ceo.jpg
Ed Liddy, Allstate CEO and
Chairman
photo: Allstate website






Allstate
Forbes Magazine reported the total compensation for Allstate's CEO Ed Liddy was $27 million in 2005 and $18 million for 2006.

Liddy, Allstate, and AIG
"On September 18, 2008, the Board of Directors of American International Group, Inc. elected Edward M. Liddy as Chief Executive Officer and a director of AIG and appointed him as Chairman of the Board. Mr. Liddy, age 62, joined the private equity investment firm of Clayton, Dubilier & Rice, Inc. earlier this year. He served as Chairman of the Board of The Allstate Corporation, the parent of Allstate Insurance Company, from January 1999 until his retirement in April 2008. He also served as Chief Executive Officer of Allstate from January 1999 to December 2006, President from January 1995 to May 2005, and Chief Operating Officer from August 1994 to January 1999." Forbes Magazine