Federal Reserve an Unintentional Party to Insurance Bid Rigging

As we all know, the Federal Reserve bailed out a very large insurance company today. I checked with a friend of mine in the insurance company in question and was warned not to mention their name due to legalities.

How does the Fed participate in bid rigging? It is not as direct as the previous versions. It now exists again with the recent bailout.

The old bid rigging:

1. Before any bids were submitted, it was determined which insurance company would win the business.
2. They set a "target" for the winner to submit as its bid.
3. They obtained losing bids from other participating insurance companies.
4. By misleading customers into believing that the customers' interests came first, the conspirators fraudulently obtained millions of dollars in premiums for the insurance companies.

The new bid rigging:

1. The insurance carrier artificially "low-balls" insurance bids and becomes insolvent.
2. The carrier wins the bids and takes a loss, but obtains the business away from more prudent carriers - creating artificially low bids.
3. The carrier is then bailed out to keep them in a competitive position.
4. The low-balling can continue as the carrier can bid lower than the market requires as they have an inflow of money that was not produced internally.
5. The carrier can keep low-balling which is not fair to the other carriers.

By putting in a floor or subsidizing the insurance market, the Federal Government may be aiding the insurance carrier to underbid the market. While this is a hybrid situation, the Feds have supported this low-bidding strategy.

HOW DO I KNOW THIS? We have reviewed some of this carrier's policies and have noticed that their bids in some cases are lower than the rest of the market. In some cases, the bids for Workers Comp coverage did not match the claims experience and losses to a very high degree. Now, will the bids become even lower with the taxpayers backing the carrier?