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AIG Cleared Of Predatory Pricing

The market has been buzzing about AIG's commercial insurers allegedly underpricing their coverage beyond all sound judgment to overcome the reputational damage done by their ...

By Staff Writer | Updated on March 25, 2009

The market has been buzzing about AIG’s commercial insurers allegedly underpricing their coverage beyond all sound judgment to overcome the reputational damage done by their corporate parent’s federal bailout. But two government representatives gave the carrier aclean bill of health of sorts, chalking up any premium declines to old-fashioned competition. Did they miss the boat?

NU’s Washington Editor, Dave Postal, reported in ourMarch 23 editionthat “there is no evidence American International Group is engaged in predatory pricing of its property-casualty business, the U.S. Government Accountability Office and Pennsylvanias insurance commissioner told Congress.”

State insurance regulators, insurance brokers and insurance buyers said that while AIG may be pricing somewhat more aggressively than in the past in order to retain business in light of damage to the parent companys reputation, they did not see indications that this pricing was inadequate or out of line with previous AIG pricing practices,Orice Williams, director of the GAOs financial markets and community investment unit, testified before Congress.

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