Rosenfield’s Goals: No Victory for the Insured

Re “Insurers Flip the ‘Crisis’ Switch,” Commentary, Dec. 24: Sept. 11, which Harvey Rosenfield dismisses as “[an excuse] for insurance company profiteering,” was in fact the largest insured loss in history, more than double the Northridge earthquake. It caused $40.2 billion in insured losses -- four times the number cited for stock market declines that Rosenfield erroneously blames for current insurance conditions.

The cost to policyholders of the mold crisis is genuine. In Texas, mold went from a $14-million to a $1-billion problem in only two years. Self-proclaimed consumer advocates called a $32-million mold suit a consumer “victory.” That judgment was recently reduced to $4 million, but not before it spawned an onslaught of copycat claims that have added $444 to insurance costs for every Texas policyholder. Some victory.

As to his favorite target, stock market losses -- property and casualty insurers’ 2002 investments actually gained $26.4 billion in investment income through September and will likely approach $36 billion for the year. And 66% of these investments are in bonds, only 17% in stocks. Investment income declined from its 1997 peak, but how would a prudent investment strategy dependent on bonds do anything else in the face of 12 interest rate cuts by the Federal Reserve?

Homeowners nationwide are actually paying about the same for insurance as they did 10 years ago, despite dramatically increased home values. Nationally, average insurance costs have increased less than $50 this year, while the median cost of a home has climbed by more than $15,000. Does Rosenfield not understand that a more expensive home costs more to insure? Laughably, Rosenfield shifts the blame for medical malpractice problems away from lawyers. The success of the 1974 Medical Injury Compensation Reform Act wasn’t mentioned because the trial bar wants desperately to do away with it -- inevitably causing the same medical availability and affordability problems experienced elsewhere.

Candysse Miller

Executive Director

Insurance Information

Network of California

Los Angeles