Kentucky

UPDATED: 9/28/2008 - Finis Price at TechnoEsq.com Blog posted video clip of a discussion on the implications of the AIG Bailout and its effect on annuities and the settlement process.  See,AIG Bailout Effects on Claims.  It appears I was not crying wolf, and the sky is not falling. . . . yet.

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Stories of government bailouts of private companies have a double edge.  And the implications for the consumer when that company is in the insurance business now include two-fold government involvment in both the loan and management versus state regulation of the insurance practice.  The former is federal; the latter is state.

First, the drain on taxpayer money in coming up with the funds guarantee for the bailout and the effects on our market economy which are always the topics covered by the television pundits.

Second, the effects on the consumer who is now on the receiving end of that business relationship is not always clearly addressed, to include the unintended consequences and ramifications.

AIG is a large company and one of its businesses is insurance.

Two questions for rumination today are:

• Will the desire to make a profit or at least break even or stop the loss affect the claims handling procedures?  Will they run afoul of the Unfair Claims Settlement Practices Act?  Will there be documentation?
• What will be the nature of the ownership impact due to the loan and its impact in the eyes of any jury or legally on any claims in court (diversity, government entity)?

Here's a lead to the story and a link to the full text at Yahoo:

Government steps in again, bails out AIG with $85B
By JEANNINE AVERSA, IEVA M. AUGSTUMS and STEPHEN BERNARD, AP Business Writers
WASHINGTON - The U.S. government stepped in Tuesday to rescue American International Group Inc., one of the world's largest insurers, with an $85 billion injection of taxpayer money. Under the deal, the government will get a 79.9 percent stake in AIG and the right to remove senior management.