March 5 (Bloomberg) -- American International Group Inc., the insurer that got four bailouts from the federal government, has been the subject of complaints from rivals who say the firm is underpricing commercial coverage, a regulator said.
Competitors have said AIG was able to charge lower rates after getting government help, said New York Insurance Superintendent Eric Dinallo in an interview with Bloomberg Television today.
So basically AIG takes billions of taxpayers money and then turns around and undercuts the good insurers who actually take part in non-risky underwriting. This screams of moral hazard. What makes it worse is that AIG is failing to realize that under no actuarial situations are these rates any good if there are claims longer term.
“We worry just as much about low pricing as high pricing,” because the industry needs to have enough capital to pay claims that may emerge years after policies are sold, Dinallo said
Government help “allows unhealthy insurers to grab more market share in the short term at levels that are unsustainable in the long term,” said David Sampson, head of the Property Casualty Insurers Association of America, an industry group, in a statement last week.
I mean its blatantly obvious that these type of situations will occur when the government is giving out free money and it sickens me that AIG is out causing more harm to their healthy counterpart.
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