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Our firm has received a number of calls over the past week from people, who are insured by AIG in one form or another. The pressing question has been: Is my AIG policy safe? According to the company, the answer is yes. AIG issued a statement on September 16th, assuring consumers that their policies were safe:

“Policyholders of AIG companies around the world can rest assured that AIG’s commitments will continue to be honored.”

Experts seem to agree. State regulators said last week that AIG’s insurance firms are safe. “The insurance subsidiaries are solvent and able to pay their obligations,” said Sandy Praeger, president of the National Association of Insurance Commissioners, in a press release.

Melissa Gannon, vice president of insurance and bank ratings with The agreed: “There’s no reason to panic or pull your policy out of AIG, because the (insurance) companies are secure”.

Policyholders should assess their options, Gannon said. “There’s no reason to pull your policy out now. But be smart about it and know what your alternatives are,” Gannon said. That means talking to your insurance broker about possible surrender charges and how much cash value your policy might have.

“Take a measured approach. Understand what it would cost you and what your alternatives might be to go to another company,” she said.

Despite the positive statements by industry experts, the prudent move is to look at your policy and speak with your agent about your concerns. Even if you think you do not have AIG policies, your insurance company may be an AIG subsidiary. For example, AIG owns SunAmerica (retirement annuities), 21st Century (auto insurance), and American General Life and Accident. You can check your insurance company’s Web site, do an online search, or ask your agent.

You can also check the balance sheet of insurance companies, to assess its financial strength. The National Association of Insurance Commisioners (AIC) Web site posts information — including assets and liabilities — of insurance companies.

If you decide to drop your insurance company, find out how much it will cost you. Many life and annuity insurance policies offer a reduced “cash” or “surrender value” for early termination. You can read the fine print of your policies or call your insurance company to find out. Alternatively, find out how much a new policy will cost. It may actually be more.

Finally, you can check the insurance guarantee limits of your state. In the unlikely event that an insurance company goes bust and cannot fulfill claims, each state has a Guaranty Fund to back policies.

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