AIG Plans to be among first in Iraq

[cb88]

AIG Plans To Be First When Peace Arrives In Iraq

By Daniel Hays



NU Online News Service, April 9, </STRONG>4:44 p.m. EST—American International Group plans to be out front when Iraq becomes peaceful enough to resume domestic insurance operations, a top executive with the New York-based carrier said.

“We want to be the first foreign insurance company over there,” said Gordon Knight, president of AIG WorldSource. The company--which presently insures 4,000 employees working for several hundred civilian contractors on the $18 billion Iraq reconstruction program--believes that, over time, “there will be a stable insurance marketplace; people buying home, life insurance, insurance for their assets,” Mr. Knight explained.

AIG, he said, is “excited” by the fact that a member of the National Association of Insurance Commissioners is headed for Baghdad to work on establishing an insurance regulatory framework for the country. Mr. Knight said the NAIC representative--Arkansas Insurance Commissioner Mike Pickens, who has worked on arrangements to provide insurance expertise for China and Vietnam--sent AIG a note saying he was going to Baghdad to draft insurance regulations for Iraq.

Mr. Pickens' office referred questions to Michael J. Carr, who lists himself as an insurance sector specialist with the Iraq Economic Recovery, Reform and Sustained Growth project. Mr. Carr said by e-mail that “at this stage it is not appropriate for an interview to take place.”

According to an Associated Press report, Mr. Carr--a British reinsurance expert--has been drafting an Iraq insurance code with Mr. Pickens modeled on Jordanian law.

Mr. Knight said he understood that under the regime of ousted dictator Saddam Hussein there had been a fairly healthy insurance industry.

AIG currently is in Iraq providing coverage for contractors under the Defense Base Act--a program akin to workers' compensation. The company, he noted, has been providing such protection since 1941, when the act was promulgated to protect workers on projects in Japan. More recently it has sold the coverage in Vietnam, Somalia and Afghanistan. CB88 Note: This coverage is NOT cheap (thus why it is more expensive for American Contractors bids over there than the local Iraqi contractors), nor are there many that understand the complexities of it enough to write it.

Mr. Knight said the DBA line is profitable, but in Iraq there have been “lots and lots of claims, ranging from slip and falls, to deaths and loss of legs and arms from exploding mines.”

Besides DBA, which Mr. Knight called “super-enhanced comp,” AIG is providing life and health, kidnap and ransom coverage, as well as medical evacuation services. AIG sees competition from CNA, ACE and Lloyd's syndicates. CB88 Note: K&R would be what would cover any execs that are over there, thus WHY Blackwater is protecting them. If a firm is paying tens of thousands of dollars to insure against kidnapping, probably part of the terms & conditions of the policy is to provide security.

Explaining the difficulties in underwriting DBA coverage, Mr. Knight noted that it would be hard to insure many of the contracting jobs even in a non-war situation, “and then you add sandstorms and mines and people shooting at you--lots of hazards.” Policy periods generally follow the length of a concern's contract.

Mr. Knight said that premiums for contractors vary according to when and where the coverage is taken out, explaining, “we're trying to calibrate the rates on a week-to-week basis,” and noting “the Sunni triangle and other areas are more unstable.”

“We think we're placing smart bets, but it's not an easy underwriting task,” he said—adding, however, that writing insurance in a volatile environment is “what AIG's good at.” CB88 Note: I think a few days ago on a different thread I equated insurance to "betting", It's really a good analogy.
The company is handling its Iraq business out of facilities it has in Dubai, United Arab Emirates; Kuwait City; Riyadh, Saudi Arabia; and Istanbul, Turkey. By the end of the year, Mr. Knight said the company expects to have a half-dozen personnel located in Iraq.

(this came from my trade journal....you have to be a subscriber. Source is www.nationalunderwriter.com )

If anyone wants to see where the economy is going, watch what the insurance companies are doing. AIG is one of the most progressive and innovative insurance companies in the world. Insuring small risks up to major complex risks. If they are banking on there being a "peaceful Iraq" and gearing up towards that, I'd watch the horizons.

[se0sea]

Oh wow.This is interesting because I work for a major insurance company and AIG tried to buy us out when we were American Bankers.They lost the bidding war to Cendant.But Cendant had to back out because of accounting fraud.AIG was already paid off (100 million dollars)to back away from the deal earlier.Cendant had to pay Bankers 400 million to walk away.

CB,would you mind if I copied this to show some of my management friends?I think they will get a kick out of this.
Oh and btw,we were eventually bought by Fortis for 2.8 billion.

ah yes,gotta love big corporation

[cb88]

Originally Posted by se0sea

Oh wow.This is interesting because I work for a major insurance company and AIG tried to buy us out when we were American Bankers.They lost the bidding war to Cendant.But Cendant had to back out because of accounting fraud.AIG was already paid off (100 million dollars)to back away from the deal earlier.Cendant had to pay Bankers 400 million to walk away.

CB,would you mind if I copied this to show some of my management friends?I think they will get a kick out of this.
Oh and btw,we were eventually bought by Fortis for 2.8 billion.

ah yes,gotta love big corporation

No problem se0....

We in the industry love to hate AIG. They are big boys with big attitudes, but unfortunately, they are probably the most creative insurers out there and insure many things I can't get insured elsewhere.

Like my defense contractors. LOL For some reason, underwriters are afraid of them, even little ones.

[se0sea]

Tanks CB. We`ll have to trade stories sometime on PM about our ins.companies:icon_mrgr

[cb88]

Originally Posted by se0sea

Tanks CB. We`ll have to trade stories sometime on PM about our ins.companies:icon_mrgr

Absolutely!!! Except, I don't work for a company, I work for a large broker/wholesaler. You couldn't pay me enough to work for a company.