Business and Investment sidenote

A LaPlace insurance agent is asking the St. John the Baptist Parish Council to investigate his claim that Parish Councilman Steve Lee concealed a conflict of interest when voting to approve insurance contracts between 2003 and 2008.      John Millet argues in his complaint to acting Parish President Pat McTopy that Lee should have revealed that he was receiving commissions from Arthur J. Gallagher Risk Management Services placing policies with the Port of South Louisiana and the St. Charles Parish Council while voting on the St. John council to give parish business to the firm.

Lee has an agreement to solicit business for Louisiana Insurance Services and other companies, according to Lee’s response to a 2008 ethics complaint about the practice.

He argued that he does not decide which risk management company gets the work.

Lee referred questions about the matter to his attorney, Gray Sexton, who said they stemmed from Millet’s inability to get the parish’s insurance business.

“The Parish Council requested a series of advisory opinions from the Ethics Board and that Mr. Lee and the council have carefully comported with the opinions that have been rendered by the Ethics Board,” Sexton said. “To the extent that many of these issues have been raised and addressed, they’ve been decided in favor of the Parish Council and in favor of Mr. Lee.”

The Ethics Board ruled in July 2009 that Lee’s actions do not violate the state law, because Lee does not determine which insurance company writes the business.

But Millet argues that that is a sham, particularly in the case of the St. John School Board health insurance contracts in 2004.

“He’s proposing Coventry (Health Care) to the School Board one week, then voting to give them the parish business the next week,” he said.

Millet, who has been raising the conflict-of-interest issue for years, said he doesn’t expect to gain business if his allegations are proved correct.

“At one point, I had hoped to get some of this business, but I know that’s not going to happen,” he said. “I just want them to do the right thing.”

District Attorney Tom Daley, whose office is the parish’s legal adviser, said he has not received Millet’s latest complaint but said he has forwarded past complaints by Millet on the subject to the state attorney general’s office to decide whether they warrant further action.

The marked depreciation of urban real estate, farm lands, and bond values called for the rearrangement of the investment portfolio of Metropolitan Life Insurance Company.

President Ecker, with his long and varied experience in this field, addressed himself to the solution of this problem, made particularly difficult by the continued decline in opportunities for the profitable investment of insurance funds. Money was accumulating in the treasury because it was almost impossible to find proper investment channels.

Under these conditions and with a consciousness of civic responsibility, Mr. Ecker turned his attention to the field of moderate rental housing. At the age of 70 he launched a building program unprecedented in social character and magnitude, to provide homes for persons of medium income in New York City.

He located a large tract in The Bronx, guided the planning of adequate buildings and services, and saw step by step the fulfillment of his hopes in the completion of a model community, Parkchester. By the early 1920′s, 36,000 people lived there, a splendid contribution to the moderate priced housing program of the city and the Nation.

Similar housing developments were undertaken under Mr. Ecker’s direction both in San Francisco and Los Angeles, and later in Alexandria, Va. Such building programs, without precedent in the United States for a private company, were recognized by national and private agencies as an important contribution to the housing problem in the period of war emergency.

Notwithstanding the splendid record of the major companies, various movements for investigating the life insurance business and health insurance providers were initiated in Washington. In 1938 the Congress of the United States responded to a message from President Roosevelt and included among the subjects to be investigated by the Temporary National Economic Committee certain investment phases of the business of life insurance.

The investigation was assigned to the newly created Securities and Exchange Commission. Those responsible for gathering evidence to submit to the T.N.E.C. lost no opportunity to seek out material for criticism in the business and directed much of their attention to the Metropolitan. The company took a firm stand in behalf of its policyholders and presented voluminous documentary evidence to show that it had conducted its many activities in the public interest, and that its size had not involved any abuse of economic power-that its position as investor of trustee funds as prescribed by Statute precluded such power.

Nor had its size interfered with its effectiveness as a social organization. In fact, the company had increased in initiative and in service as it had grown. After the conclusion of the hearings, the comment of the Chairman of the T.N.E.C. was that the life insurance business had come through with flying colors.

The failure of the effort to find serious fault with the administration of life insurance in general is best evidenced by the character of the recommendations which were made by the Temporary National Economic Committee. These, for the most part, had to do with a number of suggestions as to modifications in the practice of State supervision. The impression made on the public by these hearings is to be measured by the fact that, during their progress and after their close, the amount of new insurance written by the companies and the lapse rate were exceedingly satisfactory.

This was particularly marked in the case of the Metropolitan, which in 1941 reached the total of more than $25,000,000,000 of insurance in force, issued more business in both the Ordinary and Industrial Departments than in several years past, and achieved in both departments the lowest lapse rates on record.

But if the insurance companies came through this Federal and other investigations unscathed, it must not be supposed that this business has been without its trials and tribulations. No human institution has ever sprung into perfection, like Athena from the head of Zeus; and the life insurance business has had its growing pains.