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September 22, 2008 at 11:53 AM
Officials in Kentucy and Wisconsin are reminding agents and brokers in their states to remember state laws when responding to the current turmoil at American International Group Inc.
The regulators are sending the notices in response to questions about what producers can and cannot do when helping clients respond to news of the problems at the parent-company level at AIG, New York.
Some regulators, such as Mary Jo Hudson, the Ohio insurance director, have indicated that they waged a fierce battle to keep AIG insurance subsidiary assets from being used to help AIG’s non-insurance subsidiaries cope with demands for cash.
Kentucky Insurance Commissioner Sharon Clark writes in a notice aimed at all agents that the Kentucky department has been assured that “the insurance subsidiaries of AIG are solvent and able to pay claims.”
“As the AIG story has unfolded, we have begun receiving reports of agents who are using this as an opportunity to contact AIG insureds with offers to replace coverage,” Clark writes in the Kentucky notice. “We also have received calls from consumers who have been advised to take actions clearly not in their best interests.”
One Kentucky statute, dealing with “defamation,” and a second statute, dealing with a ban on “twisting,” or unnecessary replacement life insurance policies and annuities, could apply to this situation, Clark writes.
“We take allegations of twisting or defamation very seriously and will not hesitate to take appropriate action against agents in violation of those two statutes,” Clark writes.
HYPERLINK “http://doi.ppr.ky.gov/kentucky/Documents/Agent/aigfinal.doc”A copy of the Kentucky agent notice is available here
The Wisconsin Office of the Commissioner of Insurance has issued a bulletin addressed to all life and annuity insurers and intermediaries.
