October 30, 2008
Dear NASW Member,
The NASW professional liability insurance companies, American Home Assurance Company and Granite State Insurance Company, are subsidiary member companies of American International Group (AIG).
Recent developments surrounding AIG do not affect your professional liability insurance policy through NASW Assurance Services. Your NASW professional liability insurance coverage remains solid and stable.
Your NASW professional liability insurance companies, American Home Assurance Company and Granite State Insurance Company, have always been financially sound and their ability to support insurance coverage and pay claims remains intact and strong.
The AIG situation is continually evolving, but here are some facts you should know:
- The NASW professional liability insurance program resides in AIG's Commercial Insurance Group (AIGCI). The companies comprising this Group are separate from the AIG holding company and are not directly impacted by AIG's recent financial issues. They remain well capitalized, with, as of June 30, 2008, a statutory surplus of $26.7 billion, and invested assets exceeding $70 billion, as well as excellent financial strength ratings. In fact, AIGCI is among the largest property and casualty groups in the United States. The assets of AIGCI Group are separate from the parent company and cannot be used by the parent company.
- The AIG parent company's financial difficulties resulted from short-term liquidity issues within their financial products unit which the U.S. Government initially addressed with an $85 billion loan, then a $37.8 billion security lending agreemen and more recently, AIG, like other large corporations, was permitted to participate in a federal commercial paper funding facility. The U.S. Government now has a 79.9% equity interest in AIG and holds other collateral. The federal government's level of support is evidence of their confidence in AIG.
- AIG's new Chief Executive Officer Edward M. Liddy recently announced that AIG has no plans to sell its property and casualty business (where your professional liability policy resides). Instead, because this business is strong, he views this as AIG's core business and has stated time and again that this Group is not for sale and in fact, is the future of AIG.
- Although we can't predict the future of AIG or other institutions suffering from the recent mortgage crisis, we can tell you with confidence that your professional liability coverage is soundly in place and the ability to pay claims remains intact regardless of what happens at AIG.
That's because, as always, we at NASW Assurance Services work diligently to protect your interests. Our motto is "Where Social Workers Come First."
- Over the years, we've added benefits at no extra cost to you and have kept your premium rates stable. In fact, our NASW professional liability policyholders haven't seen a rate increase in more than 15 years. In comparison, we've seen competitor companies increase premiums significantly within one year of coverage initiation.
- We at NASW Assurance Services have a stringent review process and only select "admitted" insurance companies. An "admitted company" is overseen and backed by state regulators. Each state maintains a state guarantee fund that insures claims would be paid in the event that an insurance company can't meet its obligations.
- These guarantee funds are funded with premium taxes paid by all "admitted" insurance companies. State premium and filing taxes are paid each year through the NASW Purchasing Group to ensure that the states stand behind AIG's ability to pay claims and would be available to step in if necessary.
- When professional liability insurance companies were reviewed, the AIG insurance companies were selected because of their financial strength, stability, and excellent claims handling service. We believe that these qualities remain intact. However, rest assured that NASW Assurance Services controls your professional liability insurance program and can seamlessly transition your policy and coverage to another company to best meet your professional liability insurance needs and claims, should that need ever arise.
Although the AIG situation may continue to evolve, please know that we're monitoring it to protect your interests and will make additional information available to you at: www.naswassurance.org.
Again, we're confident your NASW professional liability insurance policy is solidly in place and that there are more than adequate financial resources available now and in the future, should you ever have a malpractice claim.
If you have any questions or concerns, please give us a call at (800) 355-3869 or contact our professional liability insurance program administrator, American Professional Agency, at (800) 421-6694.
Sincerely,
Richard L. Jones, PhD
President and Chair
NASW Assurance Services, Inc.
