Fine

AIG's U.K. unit fined $1.3 million over call centers

A U.K. unit of American International Group Inc., the world's largest insurer by assets, was fined 640,000 pounds ($1.26 million) by the Financial Services Authority for poor oversight of its call centers.

AIG's UNAT Direct unit didn't conduct enough research before call centers tried to sell insurance products such as personal accident policies to consumers, the FSA said in a statement today.

The way financial services companies sell products, and record those sales, has come under FSA scrutiny. Last week, AXA SA's Thinc Group received a 900,000-pound fine for failing to show that consumers' credit histories merited the sale of 775 subprime mortgages.

“Selling general insurance products to consumers through call centers involves greater risk,” said Margaret Cole, the FSA's enforcement director today in a statement. “The FSA will impose significant fines on general insurance firms whose management of call-center risks falls below acceptable standards.”

UNAT cooperated with the FSA to address the problems in return for a 20 percent discount on the fine, the FSA said. It stopped selling products through call centers in March 2007 and has started a review to see if any customer should be compensated.

A call and e-mail to UNAT's press office weren't immediately returned.

“We expect our member companies to uphold very high standards,” said Jonathan French, a spokesman for the Association of British Insurers, which represents 400 companies, including AIG's U.K. arm.

(Published by Bloomberg 21, 2008)