Thursday, July 2, 2009

About Foxes and Hen Houses and Insurance Companies

I’ve lived in Hawaii for almost 50 years, but am originally from Hartford, Connecticut, capital city of that state. Hartford is known as the Insurance City because the home offices of some of the biggest and best-known insurance companies in the country are located there: The Aetna, the Travelers, the Phoenix, Connecticut General, the Hartford and I’m sure there are some others I can’t remember.

There was a time when these companies considered their policies to be a sacred trust between them and their insureds. I worked for a short time at the Hartford when I was just out of college and there were many stories about the depth of the commitment to their policy holders.

One incident, according to company lore, occurred sometime back in the 1940s, as I recall, when the company was known as the Hartford Fire Insurance Company. During a reception of some kind, a young hotshot executive buttonholed the president of the company, eager to tell him that he had just settled a big claim. The policy holder owned an expensive home on the Connecticut shore that had been severely damaged by a big storm and the executive proudly reported that he had gotten the owner to agree to a settlement of $300,000.

“And what,” said the president – as I recall, his name was Creamer – “do you think the claim was actually worth?”

“Probably a half million,” said the man.

“Well, son,” said Creamer, “first thing tomorrow morning, I’d like you to do two things for me: First, please see to it that our insured is paid the full half million for his claim. Second, clear out your desk. You’re fired. This company does not cheat its policy holders.”

Alas, times have changed. CNN is reporting today that the former head of Corporate Communications for Cigna has blown the whistle on his ex-employer. He says Cigna, one of the largest health insurance companies in the country, systematically purges people and companies who have large claims form its roles. They do it by jacking up rates to the point that they become unaffordable.

Is anyone out there surprised? And does anyone still seriously believe we can work with the insurance industry to bring about real health insurance reform in the country? Please email me if you do. I’ve just learned there’s a million dollars in your name sitting in a bank in Botswana.


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