Monday, March 23, 2009

An Insurance Game between AIG and Its Rivals?

By Chaoran Hu

The bailout for the insurance giant AIG was supposed to be used to stabilize the market, but now it causes another problem between AIG and its rivals.

Some AIG competitors have complained in the meeting at Riger Hotel in Washington DC that AIG is taking the advantage of the bailout to fend off rivals to keep or win contracts, which ranges from the U.S. Olympic Committee and an Arizona airport to an Illinois nursing home and a Florida town government.

However, The GAO said insurance regulators, brokers and buyers say AIG "may be pricing somewhat more aggressively than in the past in order to retain business," but the pricing didn't appear "inadequate." The GAO said it hadn't "drawn any final conclusions." And also, government needs AIG to retain competitive in order to repay the government.

So far, it’s hard to asset that is there really unethical usages of the bailout from government. And both sides are being aggressively at this period of time, but there is no evidence of yet a "systematic problem". "The competitors know AIG's in a vulnerable state....There are plausible stories on both sides."

1 comment:

  1. AIG is giant in insurance business.but you talked about AIG's vulnerable state how you say that?are the competitors right at their point?what do you think about this whole scenario