AIG Woes Spark Concern Among Operators
As worries about the economic health of insurance giant AIG dominated headlines last month, they also sparked concern among business aircraft operators about the state of their insurance coverage. Mike Nichols, NBAA’s vice president for operations, education and economics, responded, “NBAA recommends that operators who are concerned about their specific situation communicate with their aviation insurance broker about plans and contingencies.”
Many operators apparently followed that advice, acknowledged an AIG spokesman, who said the company received “lots of calls.” Even before the company’s taxpayer bailout on September 17, jittery policy holders were told “AIG continues to operate normally. It remains adequately capitalized and fully capable of meeting its obligations to policy holders.” The spokesman added, “From a customer standpoint if [a coverage incident] had occurred, it would have proceeded as though nothing extraordinary was happening.”
The National Association of Insurance Commissioners, which consists of regulatory authorities from all 50 states, issued a statement echoing that assessment. “As always, the primary concern of state regulators is the continuing ability of insurance companies to meet consumer expectations and pay claims. The 71 state-regulated insurance companies within AIG did not receive a bailout; they are financially solvent. The federal bailout of the non-insurance portions of AIG does not negatively change the solvency strength of its insurance subsidiaries.”
Despite the news of a government lifeline, AIG was removed from its position on the Dow Jones Industrial Average. According to a source from the company, the mood in his department was “rather optimistic” after a town-hall meeting by AIG’s new government-appointed CEO, Edward Liddy, who outlined plans for repaying the loan and returning the company to normalcy within 24 months.