NYSID Issues Press Release on AIG and replacements
Today the NYSID has issued a press release aimed at AIG insurance company policy holders. Specifically it warns policyholders not to make hasty decisions with respect to their AIG policies and it "reminds" producers of their obligations in replacement situations. FAQs follow the introductory discussion.
The press release also reiterates much of what has been in NAIC releases over the last few days regarding the strength of state-regulated insurers compared to federally-regulated financial institutions including, of course, the non-insurance AIG parent company. While I think much of this is likely falling on deaf ears, perhaps some will take in the message. It may end up being one of this industry's great ironies that after all these years of the ACLI and others calling for insurers to have optional federal charters as banks do because, the argument goes, that regulatory paradigm works it may be the failure, insolvencies and bailouts of federally-regulated entities that will ultimately lead to federal regulation of insurance as well.
It would be impossible to represent as many life insurers in state regulatory matters as we do here without knowing that state regulation has significant and costly inefficiencies. But right now, of all times in history, to promote federal regulation as a better answer to the industry's problems -- in the midst of this chaos and financial devastation -- leaves me questioning whether I am reading the same articles and hearing the same information that the people arguing for federal regulation are.
As I write this I remember that little boy from the fairy tale who calls out during the parade to say that the emperor has no clothes! While there is more than one "little boy" calling out in this story, it remains to be seen whether any one will listen at all.
