With the AIG name continuing to be dragged through the mud (whether by the media, politicians or its own executives notwithstanding), the move to separate the financial giant’s successful property-casualty business from the bloodletting going on at the parent company seems like a smart move.

Our readers seem to agree. In a totally unscientific survey conducted on the AA&B Web site, 51 percent of respondents said the creation of AIU will help stabilize the business, while 26 percent said no and 23 percent voted maybe.

Our readers added the following comments:

Their P&C operations remain strong with good performance. This move should calm the market some with regard to their insurance operations.

The news media has made such a poor image of AIG that our customers will take a higher price for a product that is identical in terms, limits and coverages. I do hope that the public will soon see what the insurance industry is reading.

Most carriers think AIG’s business is either stuff nobody else wants or is priced too cheap. Right now, you can have any piece of AIG business if you can just match the price and coverages. Most insureds, if they had a choice, would move to another company.

Confidence in the “brand” has been dampened.

I certainly hope it will restore customer confidence.

If they can truly legally get out from under AIG as a separate free-standing entity and not have any obligation for AIG debts, it can work.

The AIG name has an unfavorable connotation.

It depends on if they sell it and move on. If they spin and keep some control, they will fail.

There really isn’t much I can add to the hue and cry following AIG’s announcement Saturday that it would be shelling out $100 billion in bonuses to some of the same clowns who got them into the derivatives mess in the first place. No less than the President himself has vowed to block the move with every legal means at his disposal.

Aside from the initial reaction of shock and disgust, however, the next thought that came to mind was that AIU Holdings Inc’s recent separation from the insurance industry’s answer to Marie Antoinette was a stroke of timing genius.

We recently interviewed John Q. Doyle, who now heads up AIU’s domestic division (read the article)

Doyle stressed that the formation of AIU is the first step toward separation from AIG, including a whole new branding process. Its property-casualty business is solid, and he proudly pointed out that none of the government TARP money went to this segment of AIG’s business.

We recently asked the survey question on our Web site of whether the AIU move will be enough to put an end to AIG’s problems. So far, the majority of readers seem to think it will. What do you think? Take the survey here.

Just in time for Halloween, here’s a little something from the news wires to add another touch of lunacy to the AIG debacle. From the Duluth News-Tribune:

Duluth insurance agency fined for AIG ad

A Duluth insurance agency has agreed to pay thousands of dollars in fines for taking out an ad questioning the financial health of insurer AIG.

 The state Department of Commerce says Wednesday that insurance agent Gregory Brisky agreed to pay a $2,000 fine. His agency, the Dwight Swanstrom Co., agreed to pay a $3,000 fine.

 The department says the agency took out a newspaper ad soliciting AIG customers who might be “nervous” about their insurance company in an attempt to get them to switch insurers.

 American International Group was bailed out last month when the federal government offered it an $85 billion loan during the ongoing credit crisis.

 The Commerce Department says it has affirmed the financial solvency of AIG’s insurance companies, despite the troubles with the parent company.

 It’s against Minnesota law to make misleading statements on the financial condition of any insurer.

 Brisky says he has no comment

I tried to reach the agent to get his side of the story, but had no luck (not surprisingly). What’s really ironic is the same day this little item appeared, pressure from New York AG Cuomo forced AIG to freeze $600 million in deferred compensation for the brain trust of executives that got them into this mess in the first place.

Naturally, agents have to be careful with what they say, or run the risk of violating local law. The New York State Insurance Department, for example, has issued a number of warnings about licensed producers attempting to cash in on AIG’s troubles, reminding them there are laws against:

AA&B’s legal guru Barry Zalma calls the agent’s efforts “a violation of a local law and a stupid attempt to gain business…E&O does not cover, nor should it cover, criminal or other intentionally wrongful acts.” And our “Avoiding E&O” columnist Louie Castoria, an attorney with Wilson Elser, says, “This issue came up yesterday at the Credit Crisis presentation I gave in Portland to the Oregon Surplus Line Assn. The E&O problem with dissing AIG, apart from factual inaccuracy, is that if you play on people’s fears and they swith to a non-admitted insurer, they won’t have the state insurance guaranty fund as a fallback. There are also the usual problems with switching: advancing retro dates, changes in primary coverage that may effect excess layers, etc. In general, a broker should view switching carriers with suspicion, just as a mortgage lender today should be somewhat skeptical of a re-fi. Bottom line: Does it create a material benefit for the borrower?”

However, I can’t say that I blame the Duluth agent for trying to (literally) scare up a little business in the wake of the AIG mess, although obviously one has to stay within the limits of the law. And the story does raise the legitimate issue of how to assuage policyholder concerns during these unprecedented times.

I’d be interested to hear from any of our readers about whether their customers have expressed concerns about their coverage with AIG (or any other insurer, for that matter) and how you’re responding to them.