Today, the AIG Task Force (“Task Force”) of the National Association of Insurance Commissioners (“NAIC’) held a public briefing during which it outlined the Task Force’s efforts with respect to overseeing AIG’s insurance operating units of the troubled insurance giant.
NAIC President and Kansas Insurance Commissioner Sandy Praeger opened the briefing by defending state regulation of insurance companies in light of recent suggestions that AIG’s financial difficulties demonstrate a need for a federal regulation. She also noted that while AIG may be the world’s largest insurer, only one third of the holding company’s operating divisions are in fact insurance companies, and that AIG’s recent difficulties relate to its holding company, rather than to its insurance subsidiaries.
The Task Force is comprised of members from all U.S. states, as well as international participants. Its leadership, Superintendent Eric Dinallo (NY) and Commissioner Joel Ario (PA), reiterated the value of state insurance regulation in protecting insurance companies and their policyholders. They also announced that the Task Force would be divided into two subgroups:
- A subgroup to coordinate the potential sale of the insurance companies in states that have AIG domestic companies – this would include an effort to streamline the regulatory approval process by creating a standard template for Form A filings (i.e. the insurance department filing upon the change of control of a company within an insurance holding company system); and
- A subgroup to address any special issues that may arise with respect to AIG’s life insurance subsidiaries.
Currently, AIG has domestic insurance companies in 19 U.S. states.
During the question and answer portion of the briefing, one consumer advocate queried whether a conflict of interest could arise between federal government and state insurance regulators over repayment of the $85 billion revolving loan the federal government made to AIG. Superintendent Dinallo responded that he did not believe such a conflict would arise as the federal government did not secure its loan with a lien against AIG’s insurance company assets.