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PIA Reminds Regulators of Agency Ownership Rights in Upcoming AIG Sales

PIA National has sent a letter to regulators supervising the possible sale of some insurance units of AIG to remind them of the ownership rights...
September 30, 2008

PIA National has sent a letter to regulators supervising the possible sale of some insurance units of AIG to remind them of the ownership rights of independent insurance agencies.

"One area PIA National knows should not, and legally cannot, be changed by either the selling or acquiring insurer and/or the approving authority:  This is the ownership and control rights of independent agencies and independent insurance brokers concerning their 'book of business' with the insurers," the letter states.

"Independent agencies' legal ownership interests in the 'book of expirations' are based upon the common law principles of property ownership to which most, if not all, states adhere.  Because agencies' rights are rooted in general principles of property law, modified to the peculiarities of the independent insurance agency system, courts have been highly consistent in recognizing agency ownership rights and have solidified this view over the years."

Ed Liddy, the newly appointed CEO of AIG, joined last week with NAIC officials to assure insurance professionals and consumers that AIG Insurance entities are financially sound, able to meet all obligations. NAIC officials confirmed that Liddy's plan is to support the core insurance operations that have traditionally comprised the insurance expertise of AIG. Other insurance operations of AIG (each of which is sound in its own right) may be considered for sale.

The NAIC has formed a two-pronged Task Force addressing the continuing activities related to AIG. One aspect is a joint state working group, comprised of all state insurance regulators, which  will work with AIG and federal officials to expedite the state-by-state review and approval of any sale/acquisition of an AIG insurance entity.