Insurance Regulation

I just finished grading a bunch of exams and Ted Frank sent me a blog post from the Orlando Sentinel.  It made me think of a test question I didn't ask.......

Ok, suppose you are the governor of a big state.  (Yes, it can have palm trees if you want.  Yes, you can have a governor's mansion.) You are the former state attorney general and have at your disposal over 1,000 employees working in the state's Attorney General's office.  In addition, you have a whole state insurance department whose sole job is to make sure the insurance industry is following the law.

You believe that the insurance industry is not playing fair.  You have no proof, but deep down in your bones you know something is going on and you even got the legislature to go along with you and it passed a law to fix all the insurance problems. You still have lingering feelings of unease about the nefarious insurers hitting your state with unconscionable, illegal, immoral, un-American, pigheaded, unreasonable, self serving, profiteering etc. and etc. price increases.  In fact, you still believe they are not abiding by the letter of the law even after all of your legislating and posturing.  The insurers are supposed to lower prices, dang it.  The law says so.

So who are you going' to call? Would you go looking to the yellow pages for a lawyer to sue the insurance industry because it was not following the law?  Or, would you ask the AG or your own insurance department to investigate?

If you thought there was merit to a case against the industry you might ask your own lawyers to look into this because that would help people who vote and it would be a good way to spend scarce state resources.  However, if you thought there was not much merit in the case, you might try to get some private law firms involved because everyone knows trial justice seeking lawyers will do just about anything for money (and it won't cost the state anything), and who knows -- one of them might strike it rich against the insurance industry.  In the mean time the nefarious insurers will have to spend tons of money defending themselves against the inevitable avalanche of lawsuits.

The first strategy makes sense if the state has a case.  The second strategy makes sense if there is no case or, merely, a superficial case.  Just ask Mr. Hood.  He probably knows just the guys who can help out the governor too!

Question:  Which governor is it?
(answer after the break)

"I’m frustrated with the fact that rates haven’t come down more, and I’m concerned about the legality of them not bringing the rates down," [Florida Governor Charlie] Crist said recently in an interview with the Orlando Sentinel.

"The law says the savings enjoyed by the insurance company must be passed on to the consumers. Well, they’re not all doing it."

Crist’s office said the legal team would look at the responses insurers have filed to the subpoenas and to review every company that has filed for a rate increase.

One of the options, Crist’s office said, is a class-action lawsuit.