AIG, which has been the subject of much public rage surrounding executive bonuses, is inciting ire from competitors, as well. The Wall Street Journal reports the insurance giant’s competitors claim the federal bailout AIG received last year gives the company an edge in commercial insurance.
“In the six months since the government stepped in, AIG at times has slashed insurance prices — by more than 30% in some cases — to fend off rivals and to keep or win contracts, according to public documents, insurance buyers, executives and others in the industry.”
New York and Pennsylvania state insurance regulators are investigating, along with the Government Accountability Office. In a preliminary report, the GAO said, while AIG was certainly more aggressive than it has been in the past, there didn’t appear to be any “inadequate” pricing, although the GAO did say it hadn’t “drawn any final conclusions.”
From the Journal: “The Fed needs AIG’s business to remain competitive because that could help the company repay the government. But if AIG charges too little for policies to keep from losing business, it could run up big losses on insurance claims years down the road — potentially bad news for the government.”