The collapse of state-regulated insurance
subsidiaries could result in a significant tax hike for nearly all Americans,
warns an insurance policy expert with the Competitive Enterprise
Institute. Eli Lehrer, who first
warned about potential problems with AIG’s US-based insurance subsidiaries in
September of 2008, warns that a second scandal appears to be brewing with regard
to the insurance giant.
“AIG subsidiaries are likely in worse shape than appeared at first blush,” Lehrer explained. So far, AIG has sold only one of its 72 subsidiaries that sell insurance in the U.S. Past collapses have not been a big deal because they have been small; but an AIG collapse would not be small. “In the past, when insurers have collapsed, it has meant that people in a few states have seen surcharges of a few dollars on their insurance policies—annoying, but not a big deal,” said Lehrer. “A bailout of AIG’s insurance businesses could mean enormous new taxes for just about everyone. Some people might see a very unwelcome surprise in their insurance bill.” Lehrer compared the situation to another famous corporate collapse. “On the surface, this looks a lot like Enron,” said Lehrer. “A lot of the underlying business may have had serious problems.”
Excerpted from CEI.com, a non-profit, non-partisan public policy group.
