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September 17, 2008
The
AAPA-endorsed professional liability insurance program is underwritten
by, depending on your state, Lexington Insurance Company or Granite
State Insurance Company, both member companies of the American International
Group (AIG). Suddenly this week, AIG is making front page headlines
due to a financial restructuring that relates to problems in the
housing market that have also triggered major problems for Wall
Street firms, one of which, Lehman Brothers, declared a well publicized
bankruptcy this week. Unlike Lehman Brothers, though, AIG is not
insolvent, i.e., does not have enough money to pay its bills. Rather,
AIG's involvement with complex financial products that were tied
to the housing market has created an urgent need to raise cash in
order to avoid a default of those obligations. Although AIG has
over one trillion dollars in assets, it cannot just apply those
assets to those obligations as they are earmarked by law for payment
of policyholder liabilities, including but not limited to, payment
of claims against PAs insured in the AAPA-endorsed program. Those
funds are still there to support your insurance policy. AIG said
in a statement issued after the close of trading Tuesday that its
"life insurance, general insurance and retirement services businesses,
including its extensive Asian operations, continue to operate normally
and remain adequately capitalized and fully capable of meeting their
obligations to policyholders." The term "general insurance" would
include professional liability policies.
An
insurer's financial stability is a major consideration in AAPA's
endorsement of a professional liability insurance provider. With
over one trillion in assets and with an AM Best rating as recently
as two months ago of A++, we had every reason to believe AIG embodied
the highest security for our members. We still believe obligations
will be met, although this week's events have resulted in a revised
Best rating of A, still considered "excellent". Because AIG is the
world's largest insurer and because this occurs at a time when Wall
Street undergoes an unprecedented radical restructuring, this is
receiving high visibility in the media. This is an extraordinary
event, as all prior instances of insurance company downgrades have
involved impending insolvencies. This one relates to a need to perhaps
separate the insurance operations of a huge organization from the
results of complex financial products that bear no relation to the
general insurance business. This is so unprecedented and has such
potential impact that the federal government has interceded to effect
a solution that will avoid an impairment of AIG's ability to conduct
ongoing insurance services. In fact, late Tuesday night, it was
announced that the Federal Reserve Bank is providing an eighty-five
billion dollar line of credit to AIG to enable just that.
We
will stay on top of this situation on a daily basis and provide
updates as new information becomes available. But rest assured the
interests of AAPA members will be protected.
AAPA
Insurance Services (AAPAIS) is a gateway to professional liability
insurance from AIG, the most financially secure insurance company
in the market (based on an A. M. Best rating of A++ and over one
half trillion dollars in assets). In an era of distressed and failing
malpractice insurers, it is of greatest value that the AAPA-endorsed
insurer will be there to defend claims against PAs now and well
into the future. Rates are competitive and usually lower than PA
employers can obtain through their own insurers, while affording
the PA his or her own personal coverage that will follow the PA
from job to job and/or cover multiple jobs. In addition, AAPAIS
acts as a trusted advisor to PAs on matters relating to insurance
and malpractice risk management issues whether or not insurance
is purchased through them.
We
also provide risk management educational services, and serve as
a resource to AAPA members for questions about liability insurance
and medical malpractice issues.
For immediate access to insurance program details and to apply online, click below:
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