This is another occasional article in my crusade to put venal corporate America and its pawn, corrupted, captive government, in their well deserved slime light, one that can't be missed by anyone who is observant and not fooled. Nevertheless, this article may shed some further slime light.
The industry evolved from the public's and various organizations' and enterprises' needs to be protected at a cost less than being unprotected from the risks that might occur from various mishaps such as those associated with property damage, death, automobile accidents, health care; etc. The earliest instances of transferring or distributing risk date back 5,000 years to Chinese and Babylonian traders. In the U.S. today the industry is a booming trillion dollar annual business comprising over 6,000 companies and employing over two and one-half million people.
There are nearly 30 different kinds of insurance offered by the industry. There are even "back-up" reinsurance companies to insure the up-front insurance companies. No company offers all of the different kinds of insurance. Most insurance companies specialize in only one or a few of the different kinds.
Overview of the Regulators
Because the insurance industry can affect the public in bad ways there are various State and Federal regulatory entities with the purported purpose of implementing and enforcing laws designed to protect the public from wrongdoing by the protectors. Initially, insurance companies were regulated solely by the States where the companies operated, but a US Supreme Court self-reversing decision in the early 19th century led to some Federal laws and implementing regulations such as in cases of price fixing. Not that it mattered though as we shall see.
Capture of the Regulators by the Regulated
There probably isn't any industry operating intra and inter-state in America that has not "captured" their regulators, making them protectors of the regulated and leaving the public unprotected. That is simply the way America's corpocracy operates; namely, Government America's acquiescence to Corporate America. The insurance industry, of course is no exception. Regulators become the protectors of unscrupulous protectors, so to speak.
There are several ways in which the insurance industry has captured State and Federal regulators; by financing political campaigns; by lobbying; by ghost writing lax and loophole regulations; and by skirting accountability or by minimizing fines for malfeasance. These modalities, of course, are not peculiar to the insurance industry.
Greasing Politicians' Palms Campaign donations are simply bribes in disguise since corporations expect returns from their donations. The insurance industry is a major donor, giving in the 2012 election cycle nearly $55 million to parties and candidates.
Lobbying and Ghost Writing. In 2015 the industry spent over $150 million to lobby politicians to favor the industry. This amount triples the financing contributions, which tells us that some candidates who won weren't the most favored ones so lobbying becomes much more important and expensive. A lobbyist's penultimate achievements I should think are being allowed to ghost write favorable regulations and to thwart the passage of unfavorable legislation and ensuing unfavorable implementing regulations.
Revolving Door Public officials with responsibilities for governing the insurance industry leave government and join the industry or vice versa. The revolving door is a proven way to keep influence peddling by the industry moving along and the soaking of the public unabated.
Never Get In Jail and Wrist Slapping Because government, rather than being public controlled, is corporate controlled, that very same government will bend over backwards to be ignorant of or lenient with corporate wrongdoing. The insurance industry, like the other industries, benefits from government's cover. When was the last time you read about an insurance executive going to jail or an insurance company given more than a slap on the wrist for legal wrongdoing?
Three Examples of the Industry's Malfeasance and Government Complicity
I have searched for examples of legal and/or unethical industry malfeasance and government complicity in three of the larger and more familiar sectors; namely, health insurance, auto insurance, and home owners' insurance.
Health Care Insurance The primary interest of the largest health insurance companies, being publicly traded on Wall Street, is to satisfy it and shareholders of huge financial investment firms. America's health is incidental. And, according to the activist group, Americans for Health Care Now, the business practices of these companies "have become the model for the nonprofit insurance companies with which they compete."