Corporate Fraud - AIG - 3rd Worst Insurance Company

The world’s biggest insurer AIG has been involved in scandals concerning claims-handling abuse for both individual and business clients. They have also been charged with multi-billion dollar corporate fraud, earning them the nickname “the new Enron” and the number three spot on the Top Ten Worst Insurance Companies in America.

Headquarters: New York, NY

Profits: $6.2 billion

Assets: $1.06 trillion

  •  Always focused on taking more money in premiums than it pays out in claims, AIG turns a profit through underwriting.
  • Has used all kinds of tricks to delay claims, including locking checks in a safe until claimants complained, disposing of important correspondence and routinely fighting claimants for years in court over commonplace claims.
  • After discovering that they were losing money on auto-warranty claims, AIG began systematically rejecting thousands of claims using any excuse to deny them, even against the recommendation of their own claims-handling contractor.
  • AIG and its subsidiaries built their reputation as one of the most aggressive claims fighters in the industry through their constant denial of high-profile cases.
  • State insurance commissioners found out that AIG conspired with other brokers to submit fake bids to create an illusion of competitive bidding process in commercial insurance markets and forced them to pay $12.5 million to several states.
  • An AIG reinsurance unit was forced by an arbitrator to pay more than $440 million to five insurance companies who alleged the AIG unit tried to rescind their contract when it was time to pay, and then continued to refuse payment even after several courts had ruled against rescission.
  • AIG uses the “three D’s” strategy but what has set them apart from other companies is their desire to take advantage of its policyholders’ misfortunes.
  • Unashamed of their opportunistic reputation, they have committed enough fraudulent acts to involve the FBI, and paid $1.6 billion to settle charges for financial scandals that earned them the nickname “the new Enron”.
  • Fined millions of dollars for bilking pension funds out of billions of dollars.
  • Implicated in the manipulation of $7 billion dollars worth of bonds that were intended to aid the poor and supply computers to inner city schools but instead benefited companies like AIG.
  • AIG has violated U.S. tax laws in Florida, Georgia, Oklahoma, and Tennessee by taking $220 million in bonds issued to promote affordable housing and eventually had to settle with the IRS.
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