And now, the American public is getting stiffed again.
The king of all insurance companies, AIG, trampled over consumers and other businesses for years, and now, the government and taxpayers are bailing them out. Apparently, the reward for greed and misbehavior is a golden parachute, courtesy of Uncle Sam.
AIG is not a bastion of the American economy, but has skirted the rules and taken advantage of a lack of regulation to prey upon American consumers and businesses. Commentators described AIG as “the new Enron” for its litany of corporate fraud. AIG has paid out billions in fines and settlements to the SEC, IRS, and DOJ. Even in America’s greatest times of need, AIG was found to be exploiting Hurricane Andrew and September 11th to raise rates and “capitalize” on the marketplace.
A report from the American Association for Justice found AIG to be the third worst insurer in America, with Allstate ranking as the worst. So it’s only fitting that former Allstate CEO Edward Liddy has been tapped to take over AIG. While at Allstate, Liddy set the bar for corporate abuse of policyholders and using hardball tactics to deny claims.
AIG and other insurance companies frequently rail against trial lawyers and how litigation is hurting their bottom line. By pushing through tort reform in many states, insurance companies got what they wanted: the ability to trample over policyholders without being held accountable. This is what happens when a dangerously unregulated insurance industry is allowed to run wild: greed bites off its own tail.
Before being forced out in June, the last AIG CEO received a $68 million compensation package. The former heads of Fannie Mae and Freddie Mac will each receive around $5 million each through their pensions and 401(k) alone. Lehman’s CEO received a $22 million bonus in March. Now all have tinkered or already collapsed. And in the last couple of months, reports have shown how corporations have funded executive benefits by manipulating rank-and-file pensions, two-thirds of major U.S. companies pay no federal income tax, and the median pay of S&P 500 CEOs has risen to $8.4 million.
And we’re paying for all of it.
Next time you hear the U.S. Chamber of Commerce or WMC calling for tort reform or pinning America’s ills on trial lawyers, think about AIG. Look where the lack of oversight, regulation, and accountability have left us today.
Christine Bremer Muggli is the President of the Wisconsin Association for Justice (formerly the Wisconsin Academy of Trial Lawyers), Wisconsin’s largest statewide voluntary attorney organization defending the civil justice system. Look for Christine’s columns each month.