Commissioner Savors AIG's Record Fines
The importance of corporate compliance and transparency, in not only the spirit and the letter of the law, but also in terms of technical visibility into company activities, was reinforced by yesterday's announcement by the Pennsylvania Insurance Commissioner's office that it was levying record fines against AIG.Under the terms of a settlement reached between the carrier and the commissioner, AIG will pay $9.1 million to the state in penalties and investigative costs for financial misreporting, according to the Pennsylvania Insurance Commissioner's office. The settlement also requires AIG to provide detailed annual reports regarding the company's reinsurance arrangements.
The Commissioner's office's press release has the tone of having covered all the bases, but one imagines that there must be an infinity of possible infractions that the state could wish to anticipate and police. The communiqué also indulges in a flourish of righteousness:
In February, a former AIG executive and four former Gen Re executives were found guilty in federal court for their part in a transaction related to the financial misreporting that is the subject of the Insurance Department's actions.I applaud the good work done by the Pennsylvania Commissioner's office and their colleagues around the country. Keeping companies honest is not only good for all concerned - apart from genuinely dishonest actors - but is also likely to stimulate sales of compliance technology, which is grist for the Insurance & Technology mill. However, I remain concerned at the consequences of some observers have characterized as the criminalization of risk.
Proportionate fines for misreporting a transaction is well and good; jail time is another thing. As I related last week, former AIG exec Christian Milton and three of the four Gen Re execs face possible sentences of 210 years each. Perhaps, when all is said and done the Gen Re execs and AIG's Christian Milton will remain at liberty. That's as it should be if, as a correspondent of mine has said, these individuals could have had no notion that what they were doing was a crime.Under the terms of a settlement reached between the carrier and the commissioner, AIG will pay $9.1 million to the state in penalties and investigative costs for financial misreporting, according to the Pennsylvania Insurance Commissioner's office. The settlement also requires AIG to provide detailed annual reports regarding the company's reinsurance arrangements.
Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio
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