With American International Group back in the news seeking additional federal
money to avert bankruptcy, Oregonians are asking if their local AIG insurer
is safe. Here are answers to some of your questions:
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Will the AIG insurance companies be able to pay claims?
In short, yes. The AIG affiliated insurance companies
are financially solvent and able to pay claims. The financial issues facing
the AIG holding company are occurring because of investments in risky
mortgage-backed securities initiated by AIG financial products companies.
Continued loss reports are largely due to those same investments. The
newly announced government funding is primarily directed at improving
AIG's capital position and protecting the value of its key businesses.
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What are state regulators doing to make sure AIG insurance
companies can continue to pay claims?
State insurance regulators are closely monitoring the
financial condition of the AIG affiliated insurance companies and are
reviewing any activity at the parent company that impacts insurance company
assets. Any significant transaction impacting an AIG insurance company,
including sale of the company, is subject to state regulator approval.
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Didn't the government just bail out AIG? Why do they
still need more money?
Due to general economic conditions, almost everyone is
losing money, including AIG and other insurance companies. When the government
stepped in to assist AIG, the assumption was that the AIG holding company
could sell its valuable insurance operating subsidiaries to raise funds
to pay back the loan. Unfortunately, the credit market was and continues
to be basically frozen. Thus, AIG needs further support from the federal
government.
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What happens if AIG affiliated insurance companies get into financial trouble?
State regulators have a variety of tools available if
it appears that an insurer is not going to be able to fulfill its promises
to policyholders. The state can take over management of an insurer through
conservation or rehabilitation. Even if liquidation of an insurance company
is necessary, policyholder claims will generally be paid either by the
insurance company or by a guaranty fund, which all states have in place
to provide coverage to policyholders. This protection applies to direct
business written by authorized licensed insurers. For more information,
visit: http://insurance.oregon.gov/FAQs/guaranty_fund.html
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Are the insurance and annuity policies I purchased from AIG safe, or am I going to lose my money?
Your policies are safe. AIG's insurance companies are solvent and able to honor policyholders' claims. The Oregon Insurance Division is closely monitoring the situation to ensure policyholders are protected and that there will continue to be sufficient assets to pay claims.
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I own an AIG American General fixed annuity. Is that protected by state insurance solvency standards in the same way that insurance policies are?
Yes. Fixed annuities are considered a type of life insurance. As such, they are protected by the same solvency and guaranty framework as traditional life insurance. If at some point in the future AIG insurance companies or their assets and blocks of business are sold, fixed annuity-holders should experience no changes to the way their policies are administered – other than the fact that their correspondence may come from a different company. This is not unique to AIG; insurance companies are bought and sold every day. Your benefits as defined in the original annuity contract remain the same in a sale.
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Should I cash in my insurance and annuity policies and purchase insurance from another insurer?
As stated above, the AIG insurance companies are solvent
so your policies are not in jeopardy. Whether you should cash in your
insurance policy or switch insurance to another insurer is, as always,
a personal decision. Please be aware that some policies may contain surrender
charges and/or cancellation penalties. Contact the Oregon Insurance Division's
toll-free hotline at 1-888-877-4894 to find out all the
information your agent or broker should give you before you make a decision.
Talk to your financial adviser before making any decisions. If you have
any insurance policy with an AIG company and someone tells you to replace
it because of the troubles at AIG's parent company or supposed trouble
at the insurance company, call the Oregon Insurance Division's toll-free
hotline at 1-888-877-4894.
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Should I pay the insurance premium bill that I just received from AIG?
Yes, in order for your coverage with AIG to continue, you will need to pay the insurance premiums. Failure to pay your premiums can result in the termination of your insurance policies by the insurance company.
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Would my insurance and annuity policies have been protected had AIG been declared insolvent and ordered to be liquidated by a court?
There are guaranty funds in place in all states which
act as a safety net in the event an insurer becomes insolvent. You may
obtain information about the Oregon Insurance Guaranty Association and
the Oregon Life and Health Insurance Guaranty Association by visiting
http://insurance.oregon.gov/FAQs/guaranty_fund.html.
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How can I find out if my insurance company is part of AIG?
Check the list of AIG subsidiaries at: http://insurance.oregon.gov/consumer/consumer-issues/AIG/aig-information.html
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How can I check on the financial status of a specific AIG insurance subsidiary?
You can search for each individual AIG subsidiary in our
Consumer
Information Source (CIS). Here you will find financial information
specific to the company as well as complaint data and licensing information.
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Who do I call if I have questions about my AIG policy?
Contact the Oregon Insurance Division's consumer advocates
toll-free at 1-888-877-4894.
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What can I do if I am having difficulty getting through to AIG on the telephone?
For information about filing a complaint, call the Oregon
Insurance Division's consumer advocates at 1-888-877-4894.
