April 21, 2009

AIG in Iraq: A Cruel Way to Make a Buck

AIG has been in the news mostly for its ingenious method of losing money: insuring the riskiest possible financial transactions and tanking after these risks go bad. But give the biggest insurance company in the world some credit. They still know how to make money the old fashioned way: collecting premiums and denying claims. To be sure, this strategy is not easy to do in the states, where public scrutiny is never more than a phone call away. But it works rather effectively in Iraq.

T. Christian Miller from Propublica and Doug Smith from the LA Times have described in great detail how AIG transformed Iraq into a business opportunity with an enormous upside. AIG is the predominant workers comp carrier in the war-torn country, insuring civilian workers. When these workers are injured - and the injuries can be devastating - AIG has routinely denied their claims for basic medical care, artificial limbs and desparately needed counseling for post-traumatic stress syndrome. More than 1,400 civilian workers have died and 31,000 have been wounded or injured in the two war zones.

Insurers have collected more than $1.5 billion in premiums paid by U.S. taxpayers and have earned nearly $600 million in profit, according to congressional investigators. That's nearly 40 percent profit after expenses - an unheard of loss ratio in the states.

Collect and Deny
The AIG strategy is deceptively simple: first, charge exorbitant fees for premiums, roughly 100 percent of a worker's pay. (Don't feel sorry for the companies paying these premiums; they are fully reimbursed by taxpayers.) Then, accept all the small claims and fight almost any claim involving lost time (more than four days of disability). Delay, delay, delay. Never make a payment until ordered to do so by a court.

The denial rate on serious claims is pretty astonishing: about 44 percent. How could you argue that any injury - let alone a serious one - is not work-related, as civilian employees are in Iraq for one purpose, supporting the war effort? In addition, fully half the claims for PTSD are denied. All this in the context of a war where catastrophic injuries are all too common and legitimate PTSD is as prevalent as cuts in a glass factory. How many state-side workers have watched co-workers blown to pieces by roadside bombs? Do you think that such incidents might qualify as PTSD?

AIG used the argument of extremely high-risk working conditions to boost the premiums. Then they turned around and used the strategy of denial to boost profits. Who says capitalism is dead?

I suppose you could argue that this reporting is just piling on poor AIG.The behemoth just cannot catch a PR break. Oh, well, dear reader, don't waste too much energy feeling sorry for AIG. After all, you are paying for AIG big time: in the bailout that exceeds $200 billion; in the war-based premiums that generate profits nearing 40 percent; and in all likelihood, in the social costs of caring for devastated civilian employees, who have so much difficulty accessing the comp benefits to which they are entitled.

AIG may not know diddly about the risk in risky financial vehicles, but they certainly know how to make money in conventional comp insurance. Of course, it helps that the injured workers are so invisible, like obscure figures in a desert sand storm, struggling blindly to find some kind of shelter in a harsh and unsympathetic world.


| 7 Comments

7 Comments

Hard to ever say anything good about the company before and even harder today. We should have let them fail...a big mistake that will haunt us forever it now seems.

the problem with DBA are the administrative law judges, more than anything you mention above. They are plain corrupt. end of story.

Nobody says it any better than you all do here.
CNA is denying cases just as ruthlessly.
On the ALJ's, they sure do make some absurb decisions based on absurb IME's.
Thanks for this

My husband is one of those stuck in the loop. But don't forget CNA. They made a profit of 58% in the last 5 years. AIG is the largest but if you look AIG and CNA are the worst with their lawyers in tow. When the lawyers that work for them and that are paid for by our tax dollars help by writing books on "How Not To Pay Federal Claims" it is a wonder how any of the bills get paid at all. The worst part is, that when the claims and contractors are left out to stand in the cold and not get paid we have to turn to puplic assistance. That is more tax money. It is a never ending circle. It is time that the DOL is forced to either step up or fire those who don't do their jobs and hire those who will. Give the jobs to us who have been fighting it for years. The corrupts needs to be stopped from the top all the way down.

Dept of Labor needs to re-evaluate their decision making process as do many of the AOLJ's. Their procrastination is tatamount to the insurance carriers. We, the injured contractors, need to keep speaking out.

I agree heads must roll for doing this to our people who have fought, provided support and shed blood in Iraq and Afghanistan. I am a veteran who gave over 20 years of my life to the military fighting not only in the war efforts but also fighting the political issues through out my career and I can say I am very proud of it. I was given an opportunity to be back with these war heroes and gave a couple years with a company in Afghanistan and received an injury. I too am now one of those statistics. How can we allow AIG,CNA,DOL and also the companies that these war heroes worked for get away with this crime. I would say that most of those corrupt insurance lawyers,insurance staff and DOL staff have never been in the military or have ever seen Afghanistan or Iraq except on T.V. or the newspaper. I totally agree with Marlo's statement we need to place these war heroes and family members of these war heroes in the DOL because they have been there and fought for our freedom. We know what and how to stand up against these ruthless and uncaring animals in these insurance companies to defend and assist these war heroes in receiving the benefits that they truly deserve and earned. Because of greed and corrupt upper level management we the citizens of the U.S. and also the foreign nationals that fought in the war efforts are faced with ongoing pain, finance problems, family problems and so on. I also feel that mortgage companies, credit card companies and finance companies should assist and work with the people who fought in the war efforts instead of hounding or threatening these war heroes and their family members with foreclosures, ruining their good name by submitting their names to the credit bureau because of late payments or partial payments. If we owe the government they will take it from us right away but if the government owes us then we have to wait because of all the shuffling of paperwork and losing our paperwork and so on. What happened to us!!!! We use to stand by each others side and fight for what we believed in which was freedom and justice for all. Now the mind set is if you aren't up in the executive lounge then who cares what happens to the hard working, dedicated and loyal people who sweat, fought, and gave their lives to get these corrupt, unforgiving or uncaring people up in the executive lounge. Shame on all of you!!!!!!

Thank you Dave. I have become a detective when it comes to CNA and their claim adjusters for federal workmans comp claims. They actualy have a program called the ICE team that works on how not to pay federal employees. I found an employee who posted a site and bragged on how that has been his job. The funny thing his these people who they hire to look over the law and medical files are not educated in either field. This person who is a manager is educated in International Politic and Computers.
I also found on another site that showed that if the claims adjuster don't pay out the full amounts they get bonuses. I would love to see one claims adjusters bonus checks over the last 5 years for CNA. If you look on many of the other sites you will find her name on many of them. Please take a look at my site and a few other listed on it. Help spread the word on what these people are doing to all of us. http://apps.facebook.com/causes/sharings/409463?m=034055a2

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This page contains a single entry by Jon Coppelman published on April 21, 2009 10:56 AM.

Great news for worker safety: Jordan Barab named to OSHA was the previous entry in this blog.

Cavalcade of Risk #76 is the next entry in this blog.

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