Jimmy Cefalo WIOD – 610

February 16, 2011

Jimmy Cefalo
WIOD – 610
7601 Riviera Blvd.
Miramar, FL 33022

RE: Unanimous votes in the Senate and insurance rates

Jimmy,

Experts agree that whenever any statement of any kind begins with “experts agree” it is usually wise to bet the other side.

This morning at ca. 6:15, I caught the tag end of you saying, “How often do they do that?”, “that” being a unanimous vote in the Senate.

The Founders, particularly Madison, would have frowned on unanimous votes. It would have suggested a too close fraternization with Democracy rather than a Republic which was what they intended. Not for nothing does the name “Peoples Democratic Republic of Kafiristan” or some such nonsense always seems to be used for a government that can’t feed its people and then blames and oppresses them for the drought, the monsoon, the snow, the wind, the locusts, inter alia.

I can’t share in the euphoria about Egypt. Mubarak is gone, the constitution [sic] is suspended, and the army has taken over. How does that make anyone freer?

One of the definitions of Rhetoric [note the capital R] is the ability to argue a point to its midpoint and then turn around and argue the opposite.

Two correct unanimous votes in the Senate were the 97 to 0 vote for Antonin Scalia, one of your “people”, and the 95 to 0 “Sense of the Senate” vote against the Kyoto Protocol. The Kyoto Protocol, the brainchild of former Vice President Alpha Gump, would have prevented the economic meltdown of the past 4 years by virtue of having wiped out the economy before the turn of the century.

As to “consensus” being a good thing, how many times did Coach Paterno or Coach Shula get a consensus on a game plan or a particular play?

I was about to sign off on this when I heard you and your amigo vent a bit about insurance rates in general and sink holes in particular. I have no financial interest in any insurance company either by employment or stock ownership.

You may want to think about insurance companies being akin to Social Security, state pension plans, or the Florida Pre-Paid Tuition Plan.

Money comes into today to pay for something that may never happen tomorrow. Would it make taxpayers feel better to have a fire every other year just to see if the equipment works?

I had a friend who died 2 months shy of his 65th birthday. He had paid the maximum Social Security premium for at least 30 years. Did the government give his estate a refund check because he never made a claim on that which he had paid for? Do I have to answer that question?

As a former CFO of a public company I have some knowledge of financial statements. Insurance companies have the luxury of filing 3 separate financials. One goes to the IRS; one goes to the state in which they do business; one goes to their shareholders.
In the case of State Farm, a mutual company, a company theoretically owned by its policyholders, it gets to pay “dividends” to their overcharged policy holders. The IRS, an institution that would tax balmy afternoons and good intentions if no one was looking, says these “dividends” are not taxable.

Citizens Insurance, Florida’s insurer of last resort, is in worse financial shape than Social Security. As few as 3 years ago the Florida Pre-Paid Tuition Plan was a tremendous deal. Reality, in the form of greatly increased payments to cover greatly increased and greatly increasing future costs – Has anyone ever asked why Education alone is exempt from all the economic rules governing everything else? – has set in.

As to sink hole increases, if the underwriting pool were bigger, that is to say if insurance companies could use a national census, the premium required would be less. The hard fact is that a strongly capitalized private insurance industry is a necessity. Capitalized just doesn’t mean cash flow. If that were the only criterion the Post Office would be in better shape than Switzerland.

Thus ends today’s tutorial.





Kevin Smith