GAO summarizes its investigation of AIG’s U.S. commercial pricing as inconclusive

An investigation into whether AIG has been using government aid to undercut competition in the commercial property and casualty market is inconclusive, the U.S. Government Accountability Office (GAO) said.
In a presentation to the U.S. House of Representatives’ subcommittee on capital markets, insurance and government sponsored enterprises, the GAO offered its preliminary findings in an investigation of accusations that AIG was driving down commercial property and casualty prices in an effort to attract and retain business.
The GAO noted AIG’s property and casualty business, unlike its life operations, did not receive federal assistance directly, but likely benefited indirectly from the aid.
Indirect benefits may include being spared the adverse affects of a credit downgrade or failure of the AIG parent company, the GAO said.
Although AIG’s competitors allege federal assistance allowed AIG to offer commercial property and casualty coverage at prices that are inadequate for the risks involved, the GAO also heard from state insurance regulators, insurance brokers and buyers that the company is pricing more aggressively than in the past. This pricing was not inadequate or out-of-line with previous pricing practices, the GAO said.
“At this time, we have not drawn any final conclusions about how the assistance has impacted the overall competitiveness of the commercial p/c market.”