American International Group Inc. sued to block New York’s top financial regulator, Benjamin Lawsky, from fining it over marketing insurance overseas without a state license, claiming it would be unconstitutional.
AIG, criticizing what it called a “flawed and unconstitutional” interpretation of New York law, asked a judge in Manhattan federal court Thursday to block Lawsky and the state’s Department of Financial Services from pursuing AIG over the marketing of insurance to multinational companies by a former unit.
New York doesn’t have authority to regulate the business of insurance issued to policy holders outside the state, AIG said in its complaint filed Thursday. The complaint involves AIG’s former unit, American Life Å˽ðÁ«´«Ã½Ó³» Co., or Alico.
AIG said in the complaint that state officials said they plan to begin administrative proceedings to impose fines. A March 31 consent order signed by Lawsky with MetLife Inc. found that Alico, and Delaware American Life Å˽ðÁ«´«Ã½Ó³» Co., DelAm, violated insurance regulations by marketing from New York group life, disability and medical insurance to companies with overseas operations, without being licensed by the state. AIG sold Alico and DelAm to MetLife in 2010.
“AIG may not want to cooperate with our probe, but they are not above the law -– no matter how big or powerful they may be,” Lawsky spokesman Matthew Anderson said Thursday in an e-mail. “We will respond in court.”
March Order
In the March consent order, Lawsky’s agency found that Alico made “misrepresentations and omissions” about its insurance business to the state Å˽ðÁ«´«Ã½Ó³» Department, a predecessor to the Department of Financial Services.
In the consent order, Lawsky’s department also said Alico was told that unlicensed insurance companies are limited to performing back-office functions in New York.
MetLife agreed to pay $60 million to resolve its part in the probe, by Lawsky and to Manhattan District Attorney Cyrus R. Vance Jr.
AIG said in its complaint that New York’s efforts to enforce the insurance law against it violate the insurer’s free- speech rights and unconstitutionally discriminate against out- of-state commerce. AIG claims the insurance law is too vague to provide the company with notice of what conduct is prohibited, in violation of its due process rights.
AIG, based in New York, is seeking an order declaring the insurance law unconstitutional as applied to the marketing of insurance from the state for policies that are to take effect overseas. The insurer also asked for an order barring Lawsky, the superintendent of the Department of Financial Services, from pursuing any type of proceeding or imposing any penalty, against it in connection with Alico’s insurance marketing before Nov. 1, 2010.
The case is American International Group Inc. v. New York State Department of Financial Services, 14-cv-02355, U.S. District Court, Southern District of New York (Manhattan).
With assistance from Keri Geiger in New York.
Related Articles:
- N.Y. Regulators Say MetLife Fined $60M, to Cooperate in Probe of AIG
- AIG Sells Alico Unit to MetLife for $15.5 Billion
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