MB: Managers Bookshelf

"Vulture Culture: Dirty Deals,

Unpaid Claims, and The Coming Collapse of The Insurance Industry,"

By Eric D. Gerry, Esq;

Amacom, New York, New York; York; 2008; 241 pages; $24.00

There is an iconic scene in the classic motion picture “Casablanca.” The chief of police, a libertine and gambler, is forced to close down Rick’s Café Américain. When the owner demands to know why, the chief replies, “I am shocked, shocked to discover that there is gambling going on here.” At this point a croupier delivers the chief’s winnings for the evening.

To some extent the author, who was a noted attorney with 30 years experience before the insurance practice bar, must have led an unusually sheltered life during his early years of practice. All the senior insurance executives, and many mid-level managers, were aware that it was best to limit the amount of business done with some otherwise prominent companies. As early as the 1970s, the executives of re-insurance companies (many of which were unregulated) pretty much knew which companies were straightforward and which were not.

The tone of author Eric Gerst’s book is that until the 1990s, when some of the earliest prosecutions against insurance executives and their companies took place, he was unaware of how pervasive the “vulture culture” situation had become and how rapidly the morality of the entire industry was deteriorating.

To a great extent Gerst can be forgiven the degree of shock he experienced. As he points out in the book, the insurance industry spent many millions of dollars in spinning reality and crying poverty caused by policyholder fraud. Policyholder fraud can certainly be measured in billions of dollars, but according to Gerst, so can the fraud perpetrated by some insurance company executives.

There are a number of reasons why some very astute insurance executives were tempted. First, like banks, the insurance companies’ stock in trade is cash. Lots of it. However, unlike banks, there is no federal regulation or oversight of insurance companies. That’s one of the reasons why foreign investors love to gain control of U.S. insurance companies. Also, as Gerst notes, the insurance companies adopted a divided-and-conquer approach by urging state-only supervision. They pour substantial amounts of money into lobbying efforts to prevent federal control of the insurance industry: life, health, and property/casualty insurance.

Gerst adds that in 1999, the watchdog Consumer Federation of America issued a by-state “report card” of state insurance commissioners’ offices. He writes: “The report, titled “Consumer Information Available from State Insurance Departments, presented the results of a three-month study on how well the state insurance departments make information available to the consumer in written form…. The grades were not good. “The CFA gave only seven states out of 50 an A rating. Most states fell in the middle with Bs or Cs. A surprising 17 states —more than a third— received a D, E, or I (for incomplete). One state had no written material whatsoever for the consumer.”

For a number of reasons, Gerst believes the insurance industry has drifted from a position where building both the reality and image of trust among policyholders was essential. Today’s insurance has substituted spin, fraud, and in some cases even bribery of state public officials in exchange for their silence. He calls for a two-step solution: “consumerizing state insurance departments” and “federalization of regulation and oversight of the insurance industry.”

The author has come a long way in his practice before the insurance bar, and this time his case is well-founded and should send a wake up call to both state legislatures and the U.S. Congress. If it is a bit late to alert us to the issues in the life and property/casualty side of the industry, it’s not too late to take another look at the industry’s views health care insurance. It’s probably the very best time to do so.

-- Henry Holtzman

Here are the current top 10 bestselling books for business. The list is compiled based on information received from retail bookstores throughout the U.S.A.

1. “Winners Never Cheat: Everyday Values We Learned As Children (But May Have Forgotten),” by Jon M. Huntsman (Wharton School Publishing…$19.95)(1)*
Why playing by the rules is still the only way to win.
2. “The Post-American World” by Fareed Zakaria (W.W. Norton & Co…$25.95)**
Why the 21st Century will not be “the American Century.”
3 “The Logic of Life: The Rational Economics of An Irrational World,” by Tim Harford (Random House…$19.95) (5)
Why economics always appears logical when nothing else does.
4. “Launching a Leadership Revolution: Mastering the Five Levels of Influence,” by Chris Brady and Orrin Woodward (Business Plus…$23.99) (3)
Detailed view of how to develop leadership skills.
5. “The Dip: A Little Book That Teaches You When to Quit (and When to Stick)” by Seth Godin and Hugh Macleod [Illustrator] (Penguin Group – USA…$12.95) (4)
Why winners often quit while losers stick.
6. “Women and Money: Owning the Power to Control Your Destiny,” By Suze Orman (Random House…$24.95) (2)
Guru of women's financial empowerment tells how it's done.
7. “Debt Cures “They” Don't Want You to Know About,” by Kevin Trudeau (Equity Press…$25.95)**
What banks and credit card companies prefer you not to know.
8. “21 Distinctions of Wealth: How to Create Unlimited Abundance in Your Life,” by Peggy McColl (John Wiley & Sons…$15.95)**
9. “Freakonomics: A rogue Economist Explores the Hidden Side of Everything,” by Steven D. Levitt (HarperCollins…$25.95) (6)
Why you shouldn't accept the official version of anything.
10. “The Long Tail: Why the Future of Business Is Selling Less of More,” by Chris Anderson (Hyperion…$24.95) (8)
Why products sold by internet generate nearly unending sales.
____________________
*(2) -- Indicates a book's previous position on the list.
** -- Indicates a book's first appearance on the list.
*** -- Book previously on the list is on the list once again.


"Vulture Culture: Dirty Deals, Unpaid Claims, and The Coming Collapse of The Insurance Industry," By Eric D. Gerry, Esq; Amacom, New York, New York; York; 2008; 241 pages; $24.00 There is an iconic scene in the classic motion picture “Casablanca.” The chief of police, a libertine and gambler, is forced to close down Rick’s Café Américain. When the owner demands to know why, the chief replies, “I am shocked, shocked to discover that there is gambling going on here.” At this point a croupier delivers the chief’s winnings for the evening. To some extent the author, who was a noted attorney with 30 years experience before the insurance practice bar, must have led an unusually sheltered life during his early years of practice. All the senior insurance executives, and many mid-level managers, were aware that it was best to limit the amount of business done with some otherwise prominent companies. As early as the 1970s, the executives of re-insurance companies (many of which were unregulated) pretty much knew which companies were straightforward and which were not. The tone of author Eric Gerst’s book is that until the 1990s, when some of the earliest prosecutions against insurance executives and their companies took place, he was unaware of how pervasive the “vulture culture” situation had become and how rapidly the morality of the entire industry was deteriorating. To a great extent Gerst can be forgiven the degree of shock he experienced. As he points out in the book, the insurance industry spent many millions of dollars in spinning reality and crying poverty caused by policyholder fraud. Policyholder fraud can certainly be measured in billions of dollars, but according to Gerst, so can the fraud perpetrated by some insurance company executives. There are a number of reasons why some very astute insurance executives were tempted. First, like banks, the insurance companies’ stock in trade is cash. Lots of it. However, unlike banks, there is no federal regulation or oversight of insurance companies. That’s one of the reasons why foreign investors love to gain control of U.S. insurance companies. Also, as Gerst notes, the insurance companies adopted a divided-and-conquer approach by urging state-only supervision. They pour substantial amounts of money into lobbying efforts to prevent federal control of the insurance industry: life, health, and property/casualty insurance. Gerst adds that in 1999, the watchdog Consumer Federation of America issued a by-state “report card” of state insurance commissioners’ offices. He writes: “The report, titled “Consumer Information Available from State Insurance Departments, presented the results of a three-month study on how well the state insurance departments make information available to the consumer in written form…. The grades were not good. “The CFA gave only seven states out of 50 an A rating. Most states fell in the middle with Bs or Cs. A surprising 17 states —more than a third— received a D, E, or I (for incomplete). One state had no written material whatsoever for the consumer.” For a number of reasons, Gerst believes the insurance industry has drifted from a position where building both the reality and image of trust among policyholders was essential. Today’s insurance has substituted spin, fraud, and in some cases even bribery of state public officials in exchange for their silence. He calls for a two-step solution: “consumerizing state insurance departments” and “federalization of regulation and oversight of the insurance industry.” The author has come a long way in his practice before the insurance bar, and this time his case is well-founded and should send a wake up call to both state legislatures and the U.S. Congress. If it is a bit late to alert us to the issues in the life and property/casualty side of the industry, it’s not too late to take another look at the industry’s views health care insurance. It’s probably the very best time to do so. -- Henry Holtzman Here are the current top 10 bestselling books for business. The list is compiled based on information received from retail bookstores throughout the U.S.A. 1. “Winners Never Cheat: Everyday Values We Learned As Children (But May Have Forgotten),” by Jon M. Huntsman (Wharton School Publishing…$19.95)(1)* Why playing by the rules is still the only way to win. 2. “The Post-American World” by Fareed Zakaria (W.W. Norton & Co…$25.95) Why the 21st Century will not be “the American Century.” 3 “The Logic of Life: The Rational Economics of An Irrational World,” by Tim Harford (Random House…$19.95) (5) Why economics always appears logical when nothing else does. 4. “Launching a Leadership Revolution: Mastering the Five Levels of Influence,” by Chris Brady and Orrin Woodward (Business Plus…$23.99) (3) Detailed view of how to develop leadership skills. 5. “The Dip: A Little Book That Teaches You When to Quit (and When to Stick)” by Seth Godin and Hugh Macleod [Illustrator] (Penguin Group – USA…$12.95) (4) Why winners often quit while losers stick. 6. “Women and Money: Owning the Power to Control Your Destiny,” By Suze Orman (Random House…$24.95) (2) Guru of women's financial empowerment tells how it's done. 7. “Debt Cures “They” Don't Want You to Know About,” by Kevin Trudeau (Equity Press…$25.95) What banks and credit card companies prefer you not to know. 8. “21 Distinctions of Wealth: How to Create Unlimited Abundance in Your Life,” by Peggy McColl (John Wiley & Sons…$15.95)** 9. “Freakonomics: A rogue Economist Explores the Hidden Side of Everything,” by Steven D. Levitt (HarperCollins…$25.95) (6) Why you shouldn't accept the official version of anything. 10. “The Long Tail: Why the Future of Business Is Selling Less of More,” by Chris Anderson (Hyperion…$24.95) (8) Why products sold by internet generate nearly unending sales. ____________________ (2) -- Indicates a book's previous position on the list. * -- Indicates a book's first appearance on the list. *** -- Book previously on the list is on the list once again.
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