Some folks here may recall a post several days ago (or was it yesterday) where I mentioned being in a similar situation with a previous employer. The issue at hand had to do with home insurance, following a fire that destroyed many homes and killed 25. Oakland firestorm of 1991 - WikipediaSean, thank you for your continuing coverage of the Bolt Fires issue.....As others have pointed out, it is hard to come up with a non-negative reason for GM choosing not to offer Scott the same kind of buyback they are offering others (who did not have a fire.)....On a personal note, the idea of having to go "to war" with GM to try and get a buyback is not having a good influence on my view of GM these days. Maybe if GM eventually does the right thing, eventually my opinion will return to a more neutral view. The fact the the best projection I can imagine for my view of GM is neutral, is an indicator that the "minimum bid" of good transparency from GM is not happening, especially given how much time has gone by.
I was a property underwriting manager at the time. I had watched the fires from a distance from my home in Hayward Hills. My employer was a family owned insurance company, now in their 4th generation, who had affiliation agreements to provide private insurance to university, school, police and fire employees. As such, we had a large number of totaled homes in the area (50+ as I recall) despite being a relatively small company in the state. The issue we faced was many homes were built 50-75 years prior, and due to building code updates over the years, these homes simply could not be rebuilt with similar techniques. At the time, insurance contracts did not exclude costs to bring a building up to current codes, and replacement cost estimating tools we used similarly lacked that sophistication. Insurance contracts legally limited companies to the stated limits on the policy for the most part.
The day after, I sat down with the CEO, his father (prior CEO), his son (now the CEO), my boss (VP of Underwriting), and the VPs of Actuary and Claims. I was a relatively low level manager in with the big wigs, to say I was intimidated is an understatement. I presented my finding that of the homes we had identified at the time, all were grossly under-insured due to the code requirements requiring costly upgrades to rebuild the homes (based on feedback the claims folks had previously shared with me). We had put ourselves in the position of recommending how much to insure their homes using the primitive tools, so there were understandable reasons, and exposure to our company if we took a hard line. My recommendation, agreed to unanimously was to pay these claims over policy limits to make people whole, and to run it by the board of directors to make sure we were in agreement as high up as possible. The decision would add tens of millions to our already sizable exposure.
The rest of the industry took a hard line and essentially forced their customers to sue them for the money needed to make them whole. The state Insurance Commissioner held a public meeting with industry executives, interviewing each to get their position on this point. Our CEO explained what we had chosen to do, despite not being legally obligated to do so.
The commissioner instructed all of the companies to consider taking our position (he could not do so by decree). Most eventually did as I understand, and the cost to the industry turned out to be far worse than it would have been if all had held the line. But, we kept the courts out of it, which would have added even more cost. After the hearing, corporate lawyers spoke to our CEO to thank him for taking a daring, but fair stand in the matter, and how frustrated they had been with their corporate masters for taking the hard line.
The company reputation was spared, in fact greatly enhanced by this bold move. They went on from a small western region company to a national company operating in nearly every state now. The cost was certainly high, but the reward was an unimaginable positive for the company.
I say all of this not to bring attention to anything I did, after all the decision wasn't mine to make. But, the company chose to go beyond what they were legally required to do in extraordinary circumstances, and the goodwill they gained couldn't be bought, at any price.
GM is facing similar circumstances, and their future as an EV car maker is at stake. If they hold the line as they have done up to now, their reputation will suffer tremendously. If they do the right thing, their future will undoubtedly be bright.