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By STEVE TUCKEY, who has written on insurance issues for a decade for several national media outlets

The $800 billion stimulus package signed into law in February by President Barack Obama will increase net premiums written (NPW) by an estimated 1 percent or $4.5 billion by the end of 2010, says Robert Hartwig, president of the Insurance Information Institute.

Other than those direct NPW figures, improvement from the stimulus will remain minimal. "Tax provisions providing incentives to buy cars and homes and accelerate the depreciation of equipment will have little impact on exposure," Hartwig says.

One area of impact that could be forceful will be the regulatory realm. "Federal encroachment on regulation of insurance is certain amidst a regulatory tsunami," Hartwig says.

And then there is AIG, a company that has gone in a few short months from an admired and feared giant within the industry to a symbol of all that is wrong with Wall Street.

While its main problems lie outside the regulated insurance realm, the Government Accountability Office recently looked into allegations that some of the bailout money was used to aggressively price business more than the norm, possibly to capture some revenue lost because of stigma from the crisis itself.

Both Orice Williams, director of financial markets and community investment for the GAO, and Pennsylvania Insurance Commissioner Joel Ario told a congressional hearing they had no hard evidence that anything out of line was taking place.

Nonetheless, industry rivals such as Liberty Mutual Chairman Edmund Kelly could not resist potshots in regard to AIG pricing. "I think it is fair to say they are doing some very stupid things," he was quoted as telling a conference call with investors.

Meanwhile Liberty spokesman Paul Mattera notes "that carriers were beginning to harden their prices, and they can't when you have this behemoth in the market with a federal guarantee."

In late March, the Obama administration's long-awaited proposal to rid the financial system of toxic assets was announced to three cheers from Wall Street, even as other quarters expressed concern that those cheers were prompted by government giveaways and guarantees of unprecedented scope.

For players and observers like Marsh & McLennan President and CEO Brian Duperreault, the actions are among those that serve as a pointed rejoinder to those who see the events of 2008 as the failure of Western-style capitalism and an inability to cure its excesses.

"So yes, we are in some tough times. For many people, this will be the most significant financial crisis of their lifetime," he says. "But I have great confidence in the distinctly American mindset. We will pull through it. We always do. As a people we are generally forward-looking, innovative and tenacious."

May 1, 2009

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