By Jason A. Smith
Several Georgia lawmakers -- including one from Henry County -- attended The National Association of Insurance Commissioners Fall National Meeting in the nation's capital this week, to increase their knowledge of an issue with substantial implications for the economy.
One of the main subjects of discussion was the recent announcement of a bail-out by the federal government of financially troubled American International Group (AIG).
Georgia Insurance and Safety Fire Commissioner John Oxendine attended the conference, along with three members of the State House Insurance Committee. Those legislators included State Reps. Steve Davis (R-McDonough), Carl Rogers (R-Gainesville) and Rich Golick (R-Smyrna).
The state officials participated in a number of meetings, and informational sessions during the conference. Oxendine said he invited the legislators so they could learn more about the responsibilities of insurance commissioners in the current financial climate of the country. "We've been in meetings with AIG's Chief Executive Officer Edward Liddy, officials from the U.S. Treasury and Federal Reserve Bank," said Oxendine. "We want to increase cooperation between federal agencies and state insurance regulators."
Public opinion regarding the government's decision to lend $85 billion to AIG, the largest insurer in the country, has caused some to be concerned about the safety of their own insurance policies.
However, Oxendine emphasized that insurance companies owned by AIG are "solvent" and are able to "fulfill their obligations" to their clients. "AIG is a holding company broken up into two parts," he explained. "One is insurance companies, which ... do have cash and are regulated by state authorities. The other financial subsidiaries ... are not regulated by state authorities. That is the part of the company that is financially impaired."
According to Oxendine, some insurance companies' subsidiaries will be sold off, in order to raise the capital to pay back the loan to the federal government. Those sales will be overseen by regulators at the state level.
Oxendine said insurance consumers in the U.S., should not be worried about the status of their insurance or annuities. "We want to make sure the money stays where it is available for [people] to pay their claims, and not to prop up the failed holding company," he said.
He commended Rep. Davis and his colleagues in the state legislature for "working hard" to gain understanding regarding the issues discussed at the conference.
Davis agreed with the commissioner's evaluation of AIG's financial condition, and what it means for the nation. He said the bail-out creates an issue which is "confusing" to the general public.
"A lot of people are getting scared, because they hear what's happening to AIG," he said. "The problem is not due to the insurance companies. It's coming from the financial market. We need to make sure we have more accountability and transparency in reference to what the companies are doing or not doing."
Davis said the loan to AIG does not solve all the company's problems. He added that matters related to insurance should be handled separately from the conglomerate's other components.