NEW YORK — The Martin Act, which gives the New York attorneygeneral extraordinary enforcement powers, will drive companies outof the state unless businesses lobby to change it, according toStarr Insurance Holdings Chairman and CEO and longtime AIG bossMaurice "Hank" Greenberg.

Greenberg has had his own run-in with the Martin Act in a seven-year-old caseregarding a transaction that occurred over a decade ago between AIGand Berkshire Hathaway's General Re Corp. Investigators in New Yorkhave claimed General Re helped AIG inflate loss reserves withoutactually transferring risk. 

According to a 2004 story in the legal magazine, Legal Affairs, theMartin Act empowers the AG to subpoena any document, to choosebetween filing civil or criminal charges at any time and to win acase without proving that a defendant intended to defraud anyone.People called in for questioning also do not have a right tocounsel or a right against self-incrimination, according to thearticle, which notes, "Combined, the act's powers exceed thosegiven any regulator in any other state." 

In April, the state dropped its claim for damages in the 2005 lawsuit againstGreenberg, but New York Attorney General Eric Schneiderman hascontinued to pursue the case despite being asked by two formergovernors to drop it. The case was cleared for trial in June.

Greenberg told a crowd of insurance professionals here onFriday, "I've been doing business in New York State for many, manyyears. I didn't know very much about the Martin Act up until twoyears ago. And I would urge any public company that does businessin New York State to make sure that the general counsel tells youabout the Martin Act. Because if it's not changed—and I'm going tolobby for a change very hard—it'll drive most companies out of thisstate, and the losers will be the population of this greatstate."

Greenberg offered his comments before presenting the FreeEnterprise Award to his son, ACE CEO and Chairman Evan Greenberg,at an Insurance Federation of New York (IFNY) luncheon. HankGreenberg received the award in 1979.

In his comments, Evan Greenberg also spoke his mind about regulatory-enforcement efforts and theirimpact on the insurance industry. He observed, "It's pretty toughto give a Greenberg a microphone and not have us talk a little bitabout some of the things on our mind."

Benjamin Lawsky, superintendent of the New York Department ofFinancial Services, declined to address the Martin Act specificallywhen he spoke to the IFNY audience, but he did offer comments about what he saw as regulatory efforts focusedmore on punishing past missteps than addressing present and futureconcerns. 

Regarding the Greenbergs, Lawsky said, "It's great to hear youboth today in this kind of environment because I think we're allexpressing how we really feel and it makes for real dialogue onsome of the most important issues today."