Major Insurance Scandal in Louisiana Brewing

December 10, 2008

Thursday, December 11th, 21008

Baton Rouge, Louisiana 9478820_bg2.jpg



A year ago, it would have been hard to imagine that conditions at Citizens Property Insurance Company could get any worse. The state created and state run company was in debt by over $1 billion.  The Rouge Business Report called Citizens the biggest financial disaster in the state’s history.  But never underestimate the ability of some state agencies to make a dysfunctional situation go from bad to worse. The Board governing Citizens, that includes statewide elected officials, has shown little oversight of the Companies’ spending and management decisions, sparking not only criticism from the Legislative Auditor in Louisiana, but also provoking  major investigations by both state and federal law-enforcement agencies.

The latest Citizens scandal boiled over last week when the former CEO was indicted with 14 counts of theft by fraud, filled with allegations that he spent more than $285,000 on questionable expenses including airline tickets, meals, retirement gifts and stays at lavish hotels. But his attorney said last week that his client is being singled out and “used as a scapegoat” in the poor management of the insurance company. Sources close to the investigation seemed to agree, saying that the latest indictments are just “the tip of the iceberg.”

The whole controversy has significantly elevated due to the resistance of Louisiana’s Insurance Commissioner to turning over some 2000 e-mails requested by the Legislative Auditor’s office. The Louisiana Insurance Department is arguing that the information requested by the auditor is proprietary, and it cannot allow this information to be made public. Such an argument is spurious at best, since, by law, the Auditor’s office has the same confidentiality restrictions that apply to the Commissioner of Insurance. Questions are being raised as to why the insurance department has been so defensive in turning over these 2000 e-mails requested.

Rumors are rampant throughout the Department of Insurance that many e-mails are “extremely personal” in nature with risqué and bawdy language flowing freely.  So some department employees are concerned that the Auditor’ office will weed out these salacious e-mails to show a pattern of employees abusing the use of state owned computers for matters of a personal nature. But that’s not what has piqued the interest of the outside offices investigating ties between Citizens and the Insurance Department.

The focus of investigators is not on the titillating e-mails, but rather on the number of lengthy mundane transmissions involving the rates that are charged to policyholders by Citizens. By law, the state run company must charge a rate that is 10% higher than the rates being charged by companies in the private sector. Also by state law, the property rates charged by Citizens must be “actuarially sound” and be adequate enough to keep the company on solid financial footing. When Citizens takes huge losses, as it did following Hurricane Katrina, the rate charged to policyholders has to be raised to keep the company from going broke.

Actuaries who studied the financial data of Citizens determined last spring that a 31% rate increase would be required to keep the company on sound financial footing and in line with state law.   But with no explanation, the final rate approved by the Department of Insurance turned out to be only 6%. A long explanation would be required to fully understand the process. But the bottom line is this. Was there price-fixing involved? Was there a possible conspiracy with certain parties conspiring with Citizens to keep rates artificially low?  Was the recently indicted ex-CEO part of any effort to fix rates that would benefit certain insurance companies that use Citizens? These are all questions that are being examined at the present time. Investigators feel that the several thousand e-mails being demanded by the Auditor’s Office may be a key as to whether any criminal activity actually took place.

Citizens Insurance Company was a disaster waiting to happen from its very inception. Created by the Louisiana Legislature at the behest of the Insurance Department, Citizens had to be one of the most poorly constructed business operations ever conceived by a state legislature. The company was broke from day one, with no capital and surplus made available to get Citizens started on sound financial footing. It became obvious early on that no one at Citizens had any idea of how to run an insurance company.

And a mother’s mantra of any successful insurance company is to have adequate reinsurance. Have a safety net in case a storm like Katrina comes along. The legislature and the insurance department failed to require that Citizens have sufficient reinsurance, and that single negligent decision stuck every policy holder in the state for a bill that will far exceed $1 billion. In virtually every standard that would be required of any private insurance company, Citizens failed miserably.

Citizens was an inauspicious cataclysm from day one. Now, with the ex CEO under indictment and an investigation underway of whether or not there was a conspiracy to fix property insurance rates, the Citizens debacle continues to get even worse. The best solution would be to shut the company down completely. At a minimum, Citizens needs major restructuring with more requirements for both legislative and auditor oversight.

The auto companies and key financial institutions that will receive a federal bailout often showed gross incompetence in how their businesses were run. But if one is looking for an even worst recipe for disaster, Citizens is heading toward the record book of being in a class all to its own.


                       “I either want less corruption, or more chance to participate in it.”

                                                                            Ashleigh Brilliant

Peace and Justice

Jim Brown

Jim Brown’s weekly column appears in a number of newspapers and websites throughout the State of

Louisiana.  You can read Jim’s Blog, and take his weekly poll, plus read his columns going back to the fall of 2002 by going to his own website at

Jim also has a new book out on his views of

Louisiana.  You can read about it and order it by going to .Jim’s radio show on WRNO (995 fm) from

New Orleans can be heard each Sunday, from 11:00 am until 1:00 pm.


The Player

The Irish Times August 20, 2010 Wii was a gamble that has paid off big- time for Nintendo, writes CIARA O’BRIEN FOUR YEARS ago, the Nintendo Wii was considered a novelty act that was no threat to the bigger consoles. Then it began outselling its rivals. Nintendo recently announced that Wii reached the 30-million milestone in the US – in just 45 months. In comparison, PlayStation 2 took five years to achieve that level of sales. Globally, somewhere north of 70 million Wiis have been sold. see here paper mario 3ds

The Wii was a surprise success for Nintendo, especially coming in the wake of its abandonment of the Gamecube. Viewed sceptically by gamers and media, the Wii has carved out a niche by encouraging casual new players into a market they would never have ventured into before.

On paper, it probably shouldn’t work as well as it does. The console is behind rivals Sony and Microsoft when it comes to graphics and power. But instead of pushing for more lifelike graphics, Nintendo has concentrated on family-friendly aspects. And while it was a gamble, it’s certainly paid off.

Perhaps it’s in part to do with price. At a time when the PS3 was upwards of [euro]500, you could buy a Wii for the same price as an Xbox 360. The result was sell-outs and shortages of Nintendo’s new console in stores after its launch, and particularly in the run-up to Christmas.

Nintendo has definitely succeeded in making games that are fun and hugely addictive. Take its Mariotitles, which are a staple part of the games industry, whether it’s the hand-held version of Super Mario Brosor his more recent incarnation on the Wii. The game has translated well from Game Boy and GameCube to DS and Wii, moving with the hardware. here paper mario 3ds

Of course, one major factor in the Wii’s popularity is its innovative control system. The motion-sensitive controllers were a novelty when first released, and gave the console an edge over its rivals in the fun stakes.

Now, with Sony Move and Xbox’s Kinect controllers eager to lure away some of Nintendo’s more casual converts, the market is about to get a lot more competitive. And with 3D making a big splash, Nintendo’s own take on it could help further boost the process. The Nintendo 3DS dispenses with the need for glasses to experience 3D gaming, something that Sony and Microsoft haven’t yet cracked.

With Microsoft’s new Xbox 360 Slim console making an impact on sales, the Christmas season should give a better indication of where Nintendo stands in overall console market.


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