History is repeating itself, as a farce, of course. The 2008-2009 bailout of insurers actually bailed out the crooks insured by them... oh look, they are now fully insured all over again.

It hasn't been long since then but no lessons have been learned or even facts remembered. We are again fighting fictitious nukular weapons, scamming the market, insurance and the financial system as a whole. The so called Social "Science" is nowhere to be found, not even to remind us about the pertinent facts.

In over simplified terms, the theory of insurance is to pay out in claims the same amount collected in premiums and keep the investment returns generated during the time period between collecting premiums and paying out claims (the "float").

State regulators are charged with financial oversight of insurers to prevent insurers from gambling with the float. That is what this article is about: insurers hiring private rating agencies to issue certificates to regulators certifying A+ ratings of the assets where the insurer has invested the float. The risk is the inability to validate the private ratings.

Another 'scam' has been taking place over the past year or so in the annuity market known as the "Bermuda Triangle" strategy. Some life insurers have been building market share by offering annuities at very competitive rates and then transferring the risk to a subsidiary located in Bermuda which had more lax reserving oversight, thereby significantly increasing risk of inability to make the full annuity payments.

The push and pull between regulatory oversight and risk taking has always been a financial problem with the risk ultimately being absorbed by the taxpayer - as was true with AIG when they specifically designed a new product in a manner to escape regulatory oversight - credit default swaps - which were then used to enable sellers to obtain A+ ratings from the rating companies for packaged baskets of low quality mortgage loans - thereby eventually leading to the 2008 collapse.