Physician Lifestyle

Important Update for Physicians

September 24, 2008

Physicians should be aware of a potentially troubling trend that has caught the attention of more than one Insurance commissioner over the past few weeks.

The current economic downturn and the recent Federal assistance given to American International Group (AIG), have prompted questions regarding the financial condition of many insurance companies, and in particular, those under the ownership of the AIG financial holding company.

Unfortunately, there have been reports that some agents have attempted to convince Insureds to replace their existing insurance coverage by using false or misleading statements about an insurance company's financial condition. With regard to the AIG-owned insurance companies, it is important to know that the President of the National Association of Insurance Commissioners (NAIC), Sandy Praeger, issued a news release on September 18, 2008 that stated, in part: "the 71 state-regulated insurance entities are [...] financially sound - or, in insurance regulatory terms, 'solvent' - and fully able to pay claims presented by policyholders and claimants".

While replacing coverage is certainly not against insurance laws, it is a violation if the Insured is not completely advised of possible negative results of the proposed change, such as: a reduction in coverage level, cash value decreases, surrender charges incurred, underwriting requirements, etc. T his practice is known as "twisting", and is prohibited.

So be vigilant, and do not be swayed by someone you don't know, who may be using current news events simply as a way to make new sales. That is certainly not in your best interest.

Be assured that the AMA Insurance Agency is staying on top of developments, and will provide updates as needed. We're pleased to serve as a resource to answer any insurance-related questions you may have.

The New York State Insurance Department has also provided an excellent summary of the situation, including answers to consumer questions about replacement and the financial solvency of the AIG insurance companies; we've included this news release for your convenience.

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