In Which I Use the Words "Insurance" and "Fascinating" in the Same Sentence………

Susie Madrak's has a post at C&L about Christie's allies in the New Jersey Democratic Party.

While I am not an expert on New Jersey Politics, that way madness lies, I was aware that South Jersey Dems tended to be more in line with both Christie's policies and his manner.

Normally, I would not write about Suzie's take on this, but she reveals a deep systemic problem with governance at the state and local level throughout the United States.

Specifically, she notes how insurance is routinely used as a way to generate undeserved profits for businessmen, and undeserved political contributions for politicians:

We talked about the legislative fight over funding Philadelphia's then-new convention center. He called it "a boondoggle."

"Then why did the Republicans end up supporting it?" I said.

He looked at me like I was a moron. "The bonds. The insurance. Follow the money," he said. "The Republicans are making money off all that stuff. It's always about insurance and bonds."

So I took his advice, and started delving into the esoteric world of municipal insurance. I discovered that the same insurance broker had almost every single insurance contract in the county, and that he was a heavy Republican contributor - which is why he got all those contracts in the first place.

New Jersey has a broker like that. His name is George Norcross, and he's a Democrat -- at least nominally.

To understand why he who controls the insurance controls the politics, you need to understand just how profitable insurance is. And if you own the political apparatus that runs along with it, you have a perpetual money machine that really doesn't require much upkeep.

It was the experience in the county I covered that the politically-connected insurance contracts cost an average of 30% more than a municipality or other entity would pay on the open market. Much of the excess profits get kicked back through political contributions. (These contracts are almost always an exception to the open bidding process, which makes it easy. Not so much for the homeowners paying the additional millage.)

But there are other benefits. For instance, a cooperative insurance broker who wields that much power with the carriers makes sure there are quick and speedy confidential settlements regarding messy little matters like police brutality cases or public officials who are stealing money. They control which attorneys are retained by the carriers, and they're always politically connected.

It may be tidy, but it's probably not democracy.

Here's an example of how Norcross works -- and it's all perfectly legal, even if the taxpayers get screwed:

In another DRPA-related transaction, Norcross’s insurance firm received $410,000—not for actually doing the authority’s insurance work, but for referring that business to another insurance firm, Willis of New Jersey. While a report last year from the New Jersey comptroller was critical of that arrangement, it also noted that there was technically nothing unlawful about it, a point Norcross reiterates when I bring it up. “Look,” he says, “the report itself says nothing happened that was illegal.”

Looking at this, and how the regulatory and legal environment not only enables, but encourages this behavior.

After all, when was the last time that your heard of an indictment, much less a conviction of an insurance broker doing a shady deal with a local government?

It's the Iron Triangle writ local.