I'm not comfortable with recent verbal attacks by some of the biggest names in insurance about the pricing decisions of American International Group. Indeed, I'm surprised consumer advocates and members of Congress haven't lambasted industry leaders for trying to browbeat AIG into charging more for its coverage.

For example, the lead news story in NU's Nov. 17 edition reported that Liberty Mutuals outspoken chairman, president and CEO, Edmund F. Kellyin a conference call talking about his companys resultsaccused AIG of making stupid moves that threaten to destabilize the market in its pursuit of commercial insurance business.

Mr. Kelly said AIG had intensified its efforts to increase market share, or at least preserve it, and was doing some very stupid things in the market.

He said this was more than likely because members of the creditors committee that is managing AIG are more concerned with its interface with government and capital, and are paying little attention to what is actually going on in the trenches.

Mr. Kelly said that if AIG is not reined in in its moves to grab market share, it could be very destabilizing for the market.

In that same NU edition's cover story about the state of the Bermuda market, ACE CEO Evan Greenbergwho earlier had declared that the end of the soft market in insurance has arrivedcomplained that AIG is “aggressively cutting pricing in an irresponsible way, and its worrisome.

Even former AIG CEO Hank Greenberg, now head of C.V. Starr, weighed in during a speech to a captive group. Responding to rumors that AIG is cutting rates to maintain market share, he said, That's the wrong thing to do, but sometimes desperate people do desperate things.

AIG officials have tried to counter such criticism, by denying any such “irresponsible” market activity.

Kristian P. Moor, president and CEO of AIGs property-casualty business, said that his companys commercial insurance segment is not sacrificing underwriting integrity to retain market share. I believe that allegations of excessive price-cutting are coming from carriers frustrated by their inability to win significant market share from us.

NU went on to report Mr. Moor stating that the company is continuing to win new business, and that whatever accounts are lost are due to price competition from other carriers, while adding that customers are continuing to do business with AIG because of its superior standing in the industry.

What he should have said is that it's not Liberty Mutual's and ACE's place to browbeat a competitor over its pricing decisions. If they can't or won't match AIG's price, walk away from the business. But it borders on abuse of McCarran-Ferguson protections for carriers to gang up on a competitor and try to verbally bully them into charging more for coverage.

Is AIG being more aggressive on quotes to get and keep business after the damage to their reputation and credibility following the $150 billion in bailout loans given to its parent firm? They deny it, but even if such speculation turned out to be true, that's just part of life in the free market, isn't it?

Do you think carriers are stepping over the line with their criticism of AIG's pricing?

Special Reports /

Insurers Should Watch What They Say About AIG

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