Insurance companies hold a distinct advantage over the consumer: No one understands what they're talking about.
With the public comprehending only broad generalities about building reserves through premiums to shoulder risk, you're asking for trouble. Insurance policies are full of difficult legal explanations courtesy of the government and liability explanations courtesy of insurers.
My first insurance interview as a young reporter was at giant Marsh & McLennan Cos. Inc. I sat in the train station beforehand nervously studying insurance information.
When I entered the office of President Harold Hines Jr., I reeled off a half-dozen questions structured to indicate I knew more than I really did about his field. Hines' eyebrows arched, then enthusiastically launched into the ins and outs of his beloved industry.
Even after Hines moved on to what would eventually become Aon Group Inc., I'd give him a call to have a point clarified. He always responded, remembering our early encounter.
In recent days, several giant insurers joined investment analysts and the mutual fund industry as primary targets of New York Attorney General Eliot Spitzer's investigations. Responding to the complaint, Marsh & McLennan has suspended its "market services agreements," which are highly questionable fees on top of commissions that brokers received for steering business the insurer's way.
Who knew about this practice that's so similar to wrongdoing in less obscure industries? Journalists, analysts and regulators should have, but we didn't. It almost seems as though industries difficult to explain or in which the public shows little interest are inadvertently given a pass. If that is the case, shame on us all.