Is Ignorance Bliss?

Is Ignorance Bliss?

I visited a sick friend at New York Presbyterian Hospital the day after industry titan Maurice Greenberg announced he would surrender his second position in two weeks at American International Group, retiring as non-executive chairman after already resigning as CEO.

To my chagrin, while approaching the elevators leading to my friends room, I was confronted with a gigantic portrait of Mr. Greenberg and his spouse, and realized I was about to enter the Greenberg Pavilion. No telling how many millions were contributed to earn the naming rights on the very impressive hospital wing.

When I excitedly shared this bit of insurance trivia with my friend, he had no idea who Maurice Greenberg was (although he recognized "Hank" Greenberg as a Hall of Fame baseball player). My dear pal is a very intelligent, well-read individual who keeps up with the news, but the person who had helped build the hospital room he was occupying was a total mystery to him.

Despite the fact that insurance scandals in generaland those surrounding AIG and Mr. Greenberg in particularhave frequented the headlines lately, this lack of name recognition was no surprise.

Insurance is by nature a low-profile business. Maurice Greenberg is a giant in this industryas well as an active philanthropistbut he is no Bill Gates, Lee Iacocca or Donald Trump in terms of celebrity status. Outside of his own industry, the Wall Street community, and those who donate and raise money to build hospital wings, he is a stranger to most.

Indeed, the entire "scandal" in the industry involving bid-rigging, incentive fee abuse and misuse of finite reinsurance could be taking place in Kyrgyzstan as far as the general public is concerned.

It was a different story when New York Attorney General Eliot Spitzer revealed wrongdoing in the mutual fund industry. The average person could relate. I heard complaints on the subway as people scanned the headlines: "Hey, thats my 401K those clowns were fooling around with!"

The same could be said about Mr. Spitzers probe into supposedly objective analysts who skewed their opinions to help land or keep business for the investment banks employing them: "Hey, I bought that piece of garbage stock after my broker showed me that rigged research report!"

Insurance is another story. People just dont get how this industry worksand basically, they dont care. Their only concern is buying coverage as cheaply as possible and getting claims paid. Besides, most people already "know" insurance is stacked against them. Thats why you hardly ever see positive images of anyone from the industry in the popular media.

For instance, in the recent animated film "The Incredibles," I am told the main superhero is reduced to working as a claims adjuster. Unable to suppress his instincts to do good, he helps little old ladies get claims paid against the wishes of his penny-pinching insurance company boss. Thats typical. An adjuster, agent or insurer is never pictured as a superheronot even when they go to incredible lengths to reimburse people quickly after natural disasters strike.

Insurance is just not high on the radar screen, or in the esteem, of the average Joe or Jane. This makes me wonder whether the damage to the industrys reputation stemming from the misbehavior exposed by Mr. Spitzer and other government agents will be long lasting, quickly forgotten or even acknowledged by the general public in the first place.

For the industrys sake, ignorance may indeed be bliss.

Sam Friedman

Editor-In-Chief

Reproduced from National Underwriter Edition, April 1, 2005. Copyright 2005 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.