Insurance Company Bailouts – Question From Article Reader

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Insurance Company Bailouts May Be A Common Trend

Will insurance company bailouts occur this year?   I received a question a few days ago in response to my post in reference to insurance companies receiving bailouts.  There was an article a few days ago in the National Underwriter that refuted the concern that insurance companies would be receiving bailouts.  My answer is Yes and No.

US Treasury Insurance Company Bailouts Symbol
Wikipedia – U.S. Government

It is true that insurance companies did not receive direct bailout funds.   However, the insurance companies lined up to buy banks or holding companies or to start holding companies.  The Department of the Treasury allowed the insurance companies to acquire or start up holding companies that qualify as a bank for the bailout funds.  Why was this done?

During the 1970’s the Glass-Stegall act was basically overturned.  This allowed banks and insurance companies to spread their investments into owning each other.  Many have said this eventual repeal of the Act caused the recent financial crises.

Holding companies and banks were allowed direct access to the TARP funds.  The insurance companies could then receive TARP funds indirectly.  There are no regulations on how the holding companies or banks are to use the funds.

The answer to the question is the carriers did receive the bailouts indirectly – how much we may never know for many years.

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James Moore

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Mgmt Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications

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