Greenberg: AIG Will Blacklist Tort Problem States

"We're going to do the same thing in the United States on the tort systems," he said. "You'll see these rankings in full-page newspaper ads."

Mr. Greenberg did not give specifics as to what statistics or data would be used for the listing, which presumably would deal with the size of awards and amounts of damages that state systems have allowed to be returned against firms in civil lawsuits.

His company said it is also urging risk managers to join in lobbying for legal system changes at state and national levels.

"Why would you want to invest in a state that takes you to the cleaners?" asked Mr. Greenberg, who is also chief executive officer of New York-based AIG.

"The issue that all of us confront, that the country confronts, is the tort system in the United States," he said. "Clearly it is out of control."

He said attempts are currently being made to rectify problems with the proliferation of costly asbestos litigation. But the present system is out of control. "What good does it do if bankrupt companies lose thousands of jobs," he asked. "The major beneficiary has been the trial lawyers."

Though federal legislation is in the works to set limits on class actions and other facets of asbestos cases, he said, this is only one part of what needs to be done. "We have to fight this battle on a state-by-state basis."

He asked "why should you buy municipal bonds" from a state that "takes you to the cleaners."

Most states are confronting budget deficits, he said: "Every government should be conscious of the fact that if they have a reputation that is viewed adversely by the business community, there will be something to help bring about change. This will be a wake-up call for many of them."

In an apparent reference to areas that have returned large civil jury awards against companies, he said, the ads will also include counties, "because within states there are some counties that are off the charts." He continued that "cozy relationships between the trial lawyers and the judge and juries leave very little room" for an out-of-state insurance company.

He said the practice will stop very shortly, "but we need your help."

The battle also needs to be fought by consumers because the practice is anti-consumer in the long run, he said. "You have to pass through these charges, in either premiums or whatever product is being sold. There is no free lunch. If the trial lawyer is the only beneficiary, what's the point?"

AIG, he noted, is gathering more and more support for the ad program, including calls from the financial services industry "seeking to join into this."

Mr. Greenberg said the tort system in the U.S. costs the economy 2.5 percent. or $200 billion. "We have an economy that's struggling. We hardly need a monkey on our back."

Mr. Greenberg also told risk managers that the environment has "never been as challenging."

Risk managers have to deal with "political risks, credit risks, interest rate risks, currency risks, terrorist risks, war risks, accounting risks, legal risks for a tort system out of control, regulatory risks, and risks for new viruses going out of control," he said.

He added that risk managers must deal with these issues on a real-time basis and often simultaneously.

Mr. Greenberg said the threat of terrorism will continue for some time and "is not going to end with the war in Iraq."

About solvency, he said insurance buyers need to examine a company's capital account. "Loss of reserves is real," he noted. "This is a problem, particularly for long-tailed business. Is somebody going to be around in 10 years to pay the loss?"