Naked City

Look at it this way: If you owed the state several thousand in refunds, interest, and fines on ill-gotten gains, and they declared a Christmas amnesty and let you off for a few hundred bucks -- to be paid at your convenience -- you'd be happy too. So it's easy to understand the elation of Farmers Insurance Group spokesman Mark Toohey when he called this week's settlement with the Texas Dept. of Insurance a "win, win, win ... a win for the state of Texas, a win for Farmers' customers and agents, and a win for the company." The headlines read "$100 million" to be charged to Farmers in refunds and discounts. But that includes no fines or penalties at all (prior to the Nov. 5 election, Gov. Rick Perry and his people had threatened "billions" in penalties), no admission of wrongdoing, nor even any promise to cease the practices the state considers illegal. Moreover, Farmers' agreement to extend a 6.8% rate discount to current customers -- after rates for many policyholders had doubled or tripled -- qualified as small beer indeed.

Consumer groups were quick to denounce the settlement. "The message this sends is that it is a profitable endeavor for insurance companies to overcharge in Texas," said D.J. Powers of the Austin-based Center for Economic Justice, which monitors insurance policy. But you didn't need to go looking for pesky citizen advocates for denunciations of the deal. Said the good, gray Houston Chronicle: "The settlement's relatively easy terms bode ill for the chances of effective insurance reform in the coming session of the Legislature. ... The unmistakable implication is that political favors [that is, insurance-industry campaign support for Perry and the GOP] are expected to be returned, regardless of how a business' practices affect the public."