AIG (American International Group, Inc.) filed its Form 10-K for the year ended December 31, 2019 with the U.S. Securities and Exchange Commission on February 21, 2020. AIG panel counsel members may want to review the document to learn about AIG’s 2019 results as well as future initiatives, particularly in regard to the U.S. property and casualty market.
The “General Insurance” division of AIG is a core business that consists of two operating segments – North America and International.
General Insurance is a leading provider of insurance products and services for commercial and personal insurance customers. Many insurance defense law firms strive to be a part of the AIG panel counsel program, which serves one of the world’s most far-reaching property casualty networks. General Insurance offers a broad range of products to customers through a diversified, multi-channel distribution network.
AIG General Insurance lines include general liability, commercial automobile liability, environmental, workers’ compensation, excess casualty and crisis management coverages, insurance and risk management programs for large corporate customers, excess and umbrella liability, errors and omissions (E&O), and products liability.
Operating companies within the General Insurance segment with a strong presence in the U.S. include the following:
- American Home Assurance Company (American Home)
- Glatfelter Insurance Group (Glatfelter)
- Lexington Insurance Company (Lexington)
- National Union Fire Insurance Company of Pittsburgh, Pa. (National Union)
- Talbot Holdings Ltd.
- Validus Reinsurance, Ltd.
- Western World Insurance Group, Inc.
AIG is pursuing a long-term competitive effort to achieve “organizational simplification, operational efficiency, and business rationalization.” In this regard, the company reported expenses for 2019, 2018, and 2017 that included approximately $218 million, $395 million and $413 million, respectively, of restructuring costs including primarily employee severance charges and related exit costs.
Asbestos claims remain an issue for AIG. The insurer reports in its 2019 10-K that it continues to receive claims asserting injuries and damages from toxic waste, hazardous substances, and other environmental pollutants. Alleged claims also cover the cleanup costs of hazardous waste dump sites, referred to collectively as environmental claims, and indemnity claims asserting injuries from asbestos. Most of these asbestos claims derive from policies written in 1984 and earlier. AIG started to adopt absolute exclusions for pollution-related damage and asbestos in standard policies beginning in 1985.
AIG is investing $1.3 billion to improve core processes, technology infrastructure and services over the next three years, as part of its “AIG 200 Initiative.” The company has made progress on its goal of producing an underwriting profit in its property and casualty underwriting business and is now focused on further enhancing its competitive positioning.
Ten Core AIG Operational Priorities
In addition to news from the 10-K, AIG President and COO Peter Zaffino announced “10 core operational programs” in a call with analysts on Feb. 13, 2020. There are three priorities that fall within the General Insurance division:
- Building out a standard commercial underwriting platform
- Enhancing digital workflow in the Japanese market
- Improving capabilities in private client group
Most relevant to AIG panel counsel members will be the commercial underwriting initiative, although it is clearly operational rather than claims related. AIG seeks to simplify and streamline its underwriting processes to create a “contemporary data architecture.”
Aside from 2019 results and planned operating efficiencies, AIG is responding to the rapidly evolving coronavirus that is sweeping the globe. AIG reports that it is open for business and has activated its business continuity plans. General Insurance continues to meet the need of current clients while supporting new policy business. Call centers remain open also.
AIG’s 2019 10-K is available on the AIG Investors web page or at SEC.gov.
Considerations for AIG Panel Counsel Members
AIG, like many other insurers, is pursuing large scale technology initiatives to improve operating results and meet the needs of a digital marketplace. This will become even more pronounced now that the coronavirus is accelerating trends toward remote work.
Law firms have often been very slow to adopt technology in areas like performance tracking, such as the development of metrics to manage claims processing. Many insurance defense law firms are unable to cite reliable statistics, for example, on their average time to close a case or average cost per case by line of coverage (i.e., auto claims or workers’ comp claims). The irony is that panel managers often have this data readily available for all panel counsel members.
One word of caution for AIG panel members and other insurance defense law firms is to spend the time and invest some money to increase competitiveness in the areas of performance metrics and cybersecurity. Technology is becoming a core facilitator within the insurance industry, and insurers may become impatient with law firms that are not pursuing similar initiatives.
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This article is provided for educational purposes only. It is not to be interpreted as legal advice or an opinion in regard to any topic discussed. The article should not be used as a substitute for legal advice from a licensed attorney in your state. Every situation is different and circumstances vary widely depending on the governing state law, policy provisions, and related considerations