What Will Be The Effect of A Possible AIG Failure On My Workers Comp Policy

If you are covered for Workers Comp by AIG, there will still be coverages for your company even if they were to completely fail. Each state has a guaranty fund that will keep the claims payments in place. Those payments may be delayed until the fund can absorb the claims. This is true for any carrier that operates in a state. There is a great safety net in place.

If AIG is operating as a TPA (Third Party Administrator) with your Workers Comp claims as your company is self-insured or is part of a self-insured group, then things could get tricky. Pulling your TPA agreement and having someone look over it may be a great idea.

You could be stuck with hiring another TPA as once a TPA fails, you are on the hook to keep processing the claims. I have seen companies have to pay for TPA services two or three times in one year due to the TPA's failure. State insurance departments may give you some leeway, but you are the ultimate payer when your TPA fails.

PLEASE NOTE THAT TPA'S ARE NOT COVERED UNDER A STATE GUARANTY FUND IN ALMOST ALL CIRCUMSTANCES.

It is very unlikely that AIG will fail. There is going to be a buyer, even if it is the US Government or a foreign buyer such as China. It is still wise to have a contingency plan in place as these are difficult times for any financial sector companies, including Workers Comp and other insurers.