Should Customers of AIG Take Their Business Elsewhere?

With more and more evidence surfacing that AIG has no interest in protecting the investments the American taxpayers who have kept the company afloat has it come time to encourage their customers to take their business elsewhere? Some argue that by shifting the business from AIG to their competitors the overall impact on the economy would be neutral while lessening the importance of shoring up a company with a track record of making poor business decisions. What would best serve the American people?

The shift away from AIG by its customers could increase opportunities for other insurers and financial companies to expand by bringing in capital that has been previously tied up with AIG. This increase in capital potentially would allow AIG workers to relocate to the competition and sap resources from the insurance mega-corporation. With the shift taking place over time the customer base of AIG would eventually be shifted to multiple companies lessening the risk of needed government bailouts in the future and improve the competitive environment in the insurance and financial services industries.

News coming out of AIG that executives will receive $165 million in bonuses after taking $170 billion in taxpayer money in the form of bailouts makes it clear to most people on Main Street that the executives of AIG have no conscience or sense of decency. These so-called retention bonuses are intended to keep “top performers” with major companies. With AIG needing government assistance to keep the company out of bankruptcy it is hard to think of these executives as “top performers”. Their performance has been in fact quite poor and their results have been highly negative. There is no logical reason to reward any of them. The decision makers that made the poor decisions leading to the company collapse are being rewarded for those poor decisions and actively incentivized to stay with the company. Instead of firing these people for incompetence they are being paid bonuses and asked to stay on to make more decisions about the future of the company. It is also now coming to light that eleven of the executives paid these “retention” bonuses of over $1 million have left the company. These people were not even retained yet they got over $1 million each supposedly to continue to work with the company. One of the now departed executives got over $4 million yet still left the company. This spending to retain employees was not only ineffective, it has some in law enforcement asking if it might have been illegal. Does it make sense for consumers to support businesses that make such poor decisions with their money?

The level of mistrust engendered by companies acting in the manner that AIG has over the last year is something that should not be ignored. These actions not only damage AIG but all companies in the industry. The responsible thing for consumers doing business with AIG to do is to find another company providing the service offered by AIG that is more financially stable and take their business to that company. By shifting business away from irresponsible companies to ones that make fiscally sound decisions for the long term, the overall economy is strengthened and the future is made more secure for generations to come.

As not everyone doing business with AIG would move to a single competitor, the business would be spread out over more of the market. With over 74 million policies this change could not happen overnight but a shift of a significant amount of business from AIG to its competitors could be done over time and would strengthen the health of the entire insurance industry. Spreading the business over more company also lessens the financial risk to taxpayers because no single company then is crucial to the economy and therefore every company would be forced to stand or fall on its own merits alone. This not only makes fiscal sense it holds the executives at AIG responsible for their poor decision making of the past and other executives responsible for their decisions in the future. If the business of AIG walks out the door because of their poor management, other companies will not want to hire them as executives. While some would surely get hired elsewhere they would likely not be in the position to do as much damage as they did with AIG. In addition AIG as a company would no longer be in a position to hold the American taxpayer hostage when it makes bad business decisions. If consumers at all levels take the initiative to hold AIG and its executives accountable we can all benefit from the end result.

Congress and the White House can wrangle over how to get the bonuses paid out back from the executives but that does not address the overall issue that led to the wider problem. It may be up to the consumers to actually bring the change that will benefit the American people. We can vote with our wallets to tell the users and abusers that we don’t want to do business with them. We don’t want them to get rich off of our hard earned money when they can’t even do their jobs well. We don’t have any obligation to them and they’ve shown that they don’t care about anyone but themselves. We have no reason to care what happens to the AIG executives who have screwed the American people over. We the consumers need to start looking out for our own interests and walking away from companies like AIG that let us down. If they fail because they make poor decisions and their customers lose faith in them, so be it.

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