Insurance Lobbyist Chats Up Southwest Airlines Flight Attendant, Reveals Proposed Industry Bailout

People forget that when they are on a plane they’re in public, and they do things they would normally only do when no one else is around. They clip their nails, fight with their spouse, and snort coke. And they reveal secret lobbying plans to “jam” bills through the California legislature when nobody is looking.

Overheard calls on Amtrak are legion, especially on Northeast Corridor trains between Washington DC and New York. This time, though, the conversation was overheard on a plane. An consumer activist was seated across the aisle from a lobbyist on a Southwest Airlines flight, and taped the lobbyist revealing his strategy to get new rules for the insurance industry passed at the end of the legislative session.

“We are trying to jam a bill in the last three weeks,” longtime insurance industry lobbyist Michael Gunning says on the recording, which was taken on a Southwest flight from Los Angeles to Sacramento.

…Court said he was sitting across the aisle from Gunning on the flight, but that Gunning didn’t appear to recognize him. They were in an exit row, where a flight attendant who Gunning seemed to know was standing. Court recorded their conversation when he realized they were discussing the backroom maneuvering on legislation that could drive up insurance premiums.

Both State Farm and Allstate have pulled out of the California market for new homeowners insurance policies. The state is the most heavily regulated in the country. And wildfires have driven up claims costs.

Insurers want to offer rates for policies based on their models of expected risk, as they do in much of the country. California rules limit them to pricing based on historical claims cost, but insurers say environmental issues make future claims risk greater than they were in the past.

These changes are part of a rumored “insurance company bailout, a rollback of oversight rules and an adoption of climate change risk models to help set rates are all being discussed.”

Consumer advocates argue letting insurance companies use their own model will mean letting them set prices too high. But it also means prices that are lower than what State Farm and Allstate will charge in the future (infinite!).

Meanwhile, this statement about the incident from the lobbyist’s firm is kind of funny, actually.

The housing crisis is an issue that affects everyone. The situation has intensified with the challenge of securing insurance for homes, affecting both homeowners and home builders.

Californians deserve solutions that address these issues. Our team works tirelessly — even answering questions from flight attendants about what we do — advocating for our clients and communities.

(HT: @airlinewriter)

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. The climate change “models” are about as useful as the covid models were. They are merely an excuse to raise rates to absolutely obscene prices that are completely detached from actual risk.

  2. @ Gary — This isn’t some sort of scandal. “Protectng” consumers by artificially keeping premiums below the cost of cliams is backfiring in CA, leaving consuners with no policies in CA. You cannot force these companies to sell policies at a loss. Casualty insurance premiums in CA need to be increased sharply to keep the insurance companies selling policies in CA. Hopefully these companies wil be successful in “ramming through” this legislation.

  3. I wouldn’t call that a bailout. The #1 insurer in CA gave up on new policies to send a clear message. When another of the largest did the same, even though that created opportunities for smaller insurers to eat at their marketshare, it’s indicative of serious problems in the industry. IMHO, CA insurance is in crisis right now, and *something* has to give, or CA residents will eventually simply lose the ability to obtain homeowner’s insurance.

    This call was a guy basically discussing an oft-used tactic (as mentioned pretty explicitly in the recording) to accomplish the desired goals. If we don’t like those tactics, perhaps we should call our representatives about changing the process so those tactics are no longer valid/useful (e.g. requiring a freeze on bills for 1 month before a vote is allowed <- This specifically is actually a terrible suggestion, but I'm confident more creative folks can develop better ones).

  4. While the weasel – sorry, lobbyist is absolutely wrong that unlimited increases should be permitted, insurance companies do have to actually have a reasonable chance to make a profit on a market in order for them to remain there. Some sort of compromise must be reached.

  5. As the owner of a home in the NorCal foothills I can confirm my neighbors are losing their homeowners policies left and right and are being forced into the very unpleasant pool coverage

  6. I’m a CA homeowner. There’s still 100+ insurers issuing new policies in CA. Losing big name insurers with big overheads is not necessarily a bad thing.

  7. Regarding difficulties homeowners in fire hazard zones are having in getting insurance – as with homes built on flood zones in Houston, I think it is a good thing if we could discourage folks from owning or building homes in such areas via sky high insurance premiums.

  8. @ Jake from State Farm — Breaking news; overhead is SMALLER at big insurance companies. It’s called economies of scale.

  9. @ Gene – not necessarily. They don’t spend on marketing & advertising, ie. no Jake from State Farm lol, and no big offices. They do spend more on commission to brokers though. According to my agent, they come out way ahead.

  10. The state wanting to set rates is one of many reasons that home insurers are raising rates and have ceased writing policies in many areas of the country. We are in uncharted waters in personal lines coverage right now. Insurers have gotten hammered with claims and state oversight in recent years and now premiums are exploding and areas are becoming uninsurable. Regardless of the massive inflation for insurance that is coming everyone’s way, this guy should be more careful on mass transit.

  11. I live in Louisiana. My homeowners went from $4k to $8k in one year. Allstate agent is tight lipped on the true reason. I keep hearing the word “self insured” from friends and casual groups because many cannot afford or only can find coverage from the insurer of last resort (Louisiana Citizen).
    Playing with the idea of getting a new roof just to satisfy the insurance company. If premium still sky high, may go “self insured” myself.

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