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Letter to the Editor
Insurance Company Bailout Costing Us All
By Christine Bremer Muggli
The complaints of the insurance industry have been never-ending. Insurance company CEOs demanded no regulation, no oversight and no accountability. Often, they got exactly what they asked for. On the other hand, policyholders got treated with hardball tactics as insurance companies denied and delayed their way out of paying just claims.
And now, the American public is getting stiffed again.
The king of all insurance companies, AIG, trampled over consumers and other businesses for years, and now, the government and taxpayers are bailing them out. Apparently, the reward for greed and misbehavior is a golden parachute courtesy of Uncle Sam.
AIG is not a bastion of the American economy, but has skirted the rules and taken advantage of a lack of regulation in order to prey upon American consumers and businesses. Commentators described AIG as “the new Enron” due to its litany of corporate fraud. AIG has paid out billions in fines and settlements to the Security and Exchange Commission, the IRS and the Department of Justice. Even in America’s greatest times of need, AIG was found to be exploiting Hurricane Andrew and 9/11 simply to raise rates and “capitalize” on the marketplace.
A report from the American Association for Justice found AIG to be the third worst insurer in America, with Allstate ranking as the worst. So it’s only fitting that former Allstate CEO Edward Liddy has been tapped to take over AIG. While at Allstate, Liddy set the bar for corporate abuse of policyholders and using hardball tactics to deny claims.
AIG and other insurance companies frequently rail against trial lawyers and how litigation is hurting their bottom line. By pushing through tort reform in many states, insurance companies got what they wanted: the ability to trample policyholders without being held accountable. This is what happens when a dangerously unregulated insurance industry is allowed to run wild: greed bites off its own tail.
Before being forced out in June, the last AIG CEO received a $68 million compensation package. The former heads of Fannie Mae and Freddie Mac will each receive around $5 million through their pensions and 401(k) alone. Lehman’s CEO received a $22 million bonus in March. Now all have tinkered or already collapsed. And in the last couple of months, reports have shown how corporations have funded executive benefits by manipulating rank-and-file pensions, two-thirds of major U.S. companies pay no federal income tax, and the median pay of S&P 500 CEOs has risen to $8.4 million.
And we’re paying for all of it.
Next time you hear the U.S. Chamber of Commerce or Wisconsin Manufacturers & Commerce calling for tort reform or pinning America’s ills on trial lawyers, think about AIG. Look where the lack of oversight, regulation and accountability have left us today.
Christine Bremer Muggli is the President of the Wisconsin Association for Justice (formerly the Wisconsin Academy of Trial Lawyers), Wisconsin’s largest statewide voluntary attorney organization defending the civil justice system. Look for Christine’s columns each month.
> Comments
J. Frederick on Sep 29, 2008 at 06:51 PM:
AIG's insurance operations has almost nothing to do with its need for a bailout. AIG was heavily leveraged into many markets including the failed mortgages. Its very likely they would have survived the downturn had the market not failed so fast leaving them no time to restructure thier assets. AIG has many assets they can sell off or restructure so its actually likely the taxpayers will see a profit out of this.
Whether or not you agree with their ethics, their economics are sound. Its time we start to place some blame on the ordinary people who bought, without knowing the consequences.
Richard McKee on Oct 01, 2008 at 06:57 PM:
Is UW-Milwaukee a university, or an elementary school? The chalk writing across campus has made the university appear like an elementary school playground. Enough is enough, it is time to grow up.