Skip to main content
Nossaman LLP


Update: Protecting Your Insurance Coverage In Troubled Financial Times

By: Kurt W. Melchior

This follows up on our September 29th e-alert (Will the Financial Crisis Jeopardize Your Property or Casualty Insurance?) concerning the widely reported meltdown of AIG.

Last Thursday we participated in a teleconference arranged by the American Bar Association. At the conference, Jim Boren, Chairman and CEO of AIG Environmental (one of 16 insurance company subsidiaries of parent company AIG) and brokers from Marsh reported that AIG's 16 stand-alone insurance entities are not only solvent but thriving notwithstanding the parent company's troubles. They gave details to back up that claim, stating that AIG's 16 stand-alone insurance companies have $22 billion pooled to pay current and anticipated claims and a $26.7 billion surplus that provides a cushion above and beyond anticipated claims. These funds, which are pooled to spread the risk, represent reinsurance for outstanding policies. The pools own no stock in the parent company but instead invest primarily in municipal bonds.

Mr. Boren reported that as one of eight carriers underwriting environmental risks in the U.S., AIG Environmental intends to compete vigorously in the environmental insurance market but has no plans to slash premiums or to change its appetite for risk. He reported that notwithstanding media speculation, there has not been an exodus of AIG policyholders to other carriers, although the company would cooperate in pro-rating premiums for any who wished to cancel. Mr. Boren further reported that policyholder retention rates for this October are no different from last October and new business rates also remain unchanged. Based on what we heard, there appears to be no reason for those insured by AIG companies to make a switch.

All businesses should, however, continue to pay close attention to their risk and insurance programs. Know which insurers you're dealing with and keep on top of their ratings. Consider layering your coverage, with different carriers providing different layers. Most importantly, examine your options carefully when it comes time to renew your policies. Pay attention to cancellation provisions. Nossaman's coverage counsel continually monitor new developments and can help ensure that policyholders get the most from their insurance premium dollars.

Kurt W. Melchior is a litigation partner with Nossaman in San Francisco, where he chairs the Firm's insurance coverage practice group. He has over 50 years' experience litigating complex commercial matters, including class actions, antitrust, insurance coverage, health care, and professional responsibility cases. He can be reached at (415) 438-7279 or

Deborah E. Beck is a senior litigation associate with Nossaman in San Francisco who focuses her practice on appellate, environmental, and insurance coverage issues. She counsels private businesses and public entities on insurance issues and also represents them in complex coverage litigation under all types of insurance policies, including commercial general liability, property, employment practices liability, directors' and officers' and professional liability policies. She can be reached at (415) 438-7254 or

  • Professionals
  • Practices
  • Success Stories
  • News
  • Events
  • Resources
  • Firm Pages