Our clients may wonder: in light of our nation’s evolving financial crisis, will the insurance companies still have money to pay personal injury claims? In short, the answer is yes.
Individuals seeking compensation for personal injuries need to know what will happen to insurance coverage in these challenging times. At risk are companies who invested heavily in subprime mortgages and in derivative investments whose worth depended on them.
Large insurance company AIG survived for nearly a century before imploding over investments on a derivative security called a “credit default swap.” A CDS itself is a bit like an insurance policy, but a CDS can also be highly speculative. Recently, AIG took $85 billion from the U.S. government to keep it afloat. Meanwhile, it had this to say to reassure its insureds:
“AIG’s Commercial Insurance business (AIGCI) has ample resources to underwrite business and to pay the claims of our policyholders. We continue to pay $73 million in claims every single day.”
By law, insurance companies must maintain a surplus to ensure money is available when it is needed to pay claims. Despite its difficulties, says AIG, the commercial insurer’s statutory surplus exceeds the total shareholders’ equity of all domestic commercial insurance holding companies. Says AIGCI, “Our Net Written Premium to Surplus Ratio, a key indicator of the amount of leverage of a property casualty organization, is less than 1.0 with total NWP of $12.7 billion in the first half of 2008 compared to policy holder surplus of $26.7 billion.”
AIGCI companies include the Lexington Insurance Company, National Union and American Home Assurance Company. At present, according to AIG, its invested assets exceed $70 billion.
Rest assured, Ingerman & Horwitz LLP pays close attention to facts like these. The insurance company capital needed to pay claims remains protected by regulators. When it comes to the claims of our clients, we will not let these companies cry wolf. AIG must repay this $85 billion government loan. Meanwhile, we shall continue to demand and obtain compensation for our clients’ injuries based on the fair value of their claims, and nothing else. In these uncertain economic times, we won’t bail out on you