The economically distressed insurer, American International Group (AIG), announced Sunday that it would attempt to obtain a $49 billion bailout form the Federal Government to avoid a complete financial collapse. AIG which represents one of the nations largest workers' compensation insurers and re-insurers is now facing severe economic consequences because of inadequate capitalization.
The US insurance industry represents a huge portion of the nation's financial assets and the instability of the market threatens the backbone of an unregulated workers' compensation national market, The AIG announcement comes on the heels of the failure of Lehman Brothers', the 4th largest financial institution in the United States, statement that it will be filing for bankruptcy after a weekend of failed negotiation seeking a bailout and government support. This cascading economic crash was further reflected by the Bank of America rush agreement to purchase Merrill Lynch for $53.03 billion within the last few days.
The economic woes of AIG, have been longstanding and were triggered by major investigations into the actions of its former chairman, Maurice "Hank" Greenberg's activities and the company's irregularities in the workers' compensation market. This sparked both State and Federal investigations into the company, but did not result in Federal regulation of the financial viability of the workers' compensation insurance program that are mostly State run and regulated.
State workers' compensation programs provide a huge amount of medical, temporary disability and permanent disability benefits to injured workers' and their families. While most of these benefit programs are financed by premiums collected from employers, the programs are administered and ultimately financed, administratively and fiscally, through insurance companies and reinsurers like AIG. State mechanisms that are triggered when the insurance companies or employers become insolvent are mostly if completely reliant upon other insurance companies and employer contributions.
The AIG collapse signals the need for Federal monitoring and regulation of workers' compensation benefits. It has been over 3 decades since a national commission was appointed survey the benefit program that was universally enacted by the States in 1911. The workers' compensation programs may at this time become nothing more than a bankruptcy creditor is a long and non-rewarding litigious process. The Federal Government needs to do more to honor the dignity of its workers.
The US insurance industry represents a huge portion of the nation's financial assets and the instability of the market threatens the backbone of an unregulated workers' compensation national market, The AIG announcement comes on the heels of the failure of Lehman Brothers', the 4th largest financial institution in the United States, statement that it will be filing for bankruptcy after a weekend of failed negotiation seeking a bailout and government support. This cascading economic crash was further reflected by the Bank of America rush agreement to purchase Merrill Lynch for $53.03 billion within the last few days.
The economic woes of AIG, have been longstanding and were triggered by major investigations into the actions of its former chairman, Maurice "Hank" Greenberg's activities and the company's irregularities in the workers' compensation market. This sparked both State and Federal investigations into the company, but did not result in Federal regulation of the financial viability of the workers' compensation insurance program that are mostly State run and regulated.
State workers' compensation programs provide a huge amount of medical, temporary disability and permanent disability benefits to injured workers' and their families. While most of these benefit programs are financed by premiums collected from employers, the programs are administered and ultimately financed, administratively and fiscally, through insurance companies and reinsurers like AIG. State mechanisms that are triggered when the insurance companies or employers become insolvent are mostly if completely reliant upon other insurance companies and employer contributions.
The AIG collapse signals the need for Federal monitoring and regulation of workers' compensation benefits. It has been over 3 decades since a national commission was appointed survey the benefit program that was universally enacted by the States in 1911. The workers' compensation programs may at this time become nothing more than a bankruptcy creditor is a long and non-rewarding litigious process. The Federal Government needs to do more to honor the dignity of its workers.
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