AIG to Policyholders: You Can Relax

Chances are you don't have a healthcare policy with AIG, the insurance holding company that announced an $85 billion bailout yesterday from the federal government to prevent the company from going under. AIG's health insurance business focuses on supplemental policies sold through employers that pay a cash benefit if policyholders get cancer or have a stroke, for example, and plans that cover medical and other costs if someone is in an accident or becomes disabled. AIG also sells travel insurance directly to consumers. These plans typically provide coverage if you need emergency medical care or medical evacuation while traveling overseas.

If you have one of these plans, or if your life insurance policy is with AIG, the company says not to worry. "AIG continues to operate normally and remains adequately capitalized and fully capable of meeting its obligations to policyholders," Peter Tulupman, an AIG spokesperson, told me this morning. Skeptical that he's just spouting the party line? You shouldn't be, according to the National Association of Insurance Commissioners, which represents insurance regulators from all 50 states and the District of Columbia. "If you have a policy with an AIG insurance company, they are solvent and have the capability to pay claims," NAIC President Sandy Praeger, the Kansas insurance commissioner, said in a statement.

AIG is a holding company for some 240 subsidiaries, including about 70 life and health insurance companies, according to sources. Whatever the problems with the rest of AIG, the subsidiary insurers are financially solvent. Moreover, these insurance companies are governed by state laws that require them to maintain reserves and meet solvency requirements that protect policyholders, according to the NAIC. In the unlikely event that an insurer can't pay its claims, states also have guaranty funds in place that provide coverage within certain limits.

So if you've been worried, breathe easier. Meanwhile, AIG says its shingle is out and it is continuing to sell insurance. I believe it. In my mail today, I found a solicitation from the company encouraging me to buy a policy.