I was standing at the 116th Street subway stop looking for something to read when a trained started to pull in, so I grabbed Harper’s October issue with a big picture of a fire over the headline “Too Big to Burn: AIG Plays God in Man-Made Firestorm,” handed over the $6.95 cover price (congrats Harper’s, on getting that, by the way), and slipped nimbly onto the 1 train just as the doors closed.

“Bee baa.”

Ahh. Had I been performing in a New York-life-skills competition, I would have scored pretty highly, I have to say. Pleased with myself and comfortably propped against a door, I settled in for a long exploration of one of my favorite subjects, American International Group, by one of my favorite magazines. I was particularly curious as to how, at this point, the story could possibly be advanced, after so much has been written, much of it excellent. (Good links there from The Washington Post, The New York Times, Bloomberg, and The Wall Street Journal, respectively.)

Alas, McKenzie Funk’s story (subscription) was not what I was hoping for. To be sure, a fresh angle is delivered as promised, namely that as housing development creeps into areas ever-more prone to wildfire, AIG is sending its own fire protection service to protect its insureds, creating, in effect, private fire brigades that bypass some burning houses on the way to saving others. Funk sees a creepiness here, and it’s hard to disagree. He also recounts interesting historical details, including that fire departments started as private companies in the place. In 18th-century London, for instance, authorities had to impose fines, Funk reports, to keep fire fighters from rival companies from beating the stew out of each other as they competed for water and space while fighting a blaze.

I’m sure many people were taken with the story; it wasn’t my cup of tea. It struck me as less than surprising, and not necessarily bad, at all, that insurers would act in the interest of both themselves and their insureds by taking steps to prevent losses, rather than just paying for them after the fact. This can be seen as an example of the insurance market’s salutary effects, like providing incentives to fund extensive auto safety research. There are sinister aspects here, yes; the image of AIG-hired fire fighters blowing off an anxious non-policyholder was memorable, I found. But, really, the problem with insurance, believe me, isn’t that insurers do too much for their policyholders.

Throughout the AIG disaster, I’ve thought someone, eventually, would go back to report on how AIG got to be so big and powerful in the first place: By setting new standards for battling its own policyholders over claims. AIG’s reputation for shorting its own customers is legendary. I point this out not just because I happened to have done extensive reporting on the matter for a long story for The Washington Post while the company was under investigation for accounting fraud by Eliot Spitzer. It’s also because this is the central and most under-reported-on problem with insurance generally, as I found while reporting on insurers’ response to Hurricane Katrina.

And it was Hank Greenberg at AIG who pioneered this trend, which has resulted in catastrophic outcomes for many policyholders, including AIG’s, and particularly after natural disasters, including fires, since at least the early 1990s. Indeed, it was AIG’s bullet-proof business model (which had nothing to fear from ineffectual state-based insurance regulation) that made its collapse so stunning for anyone familiar with the company.

For more on this angle, which is all too relevant in the current debate over health reform, it is well-worth revisiting Bloomberg’s award-winning work, The Insurance Hoax, as well as the work over years of Peter G. Gosselin for the L.A. Times and elsewhere.

I knew I should have grabbed the Esquire.

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Dean Starkman Dean Starkman runs The Audit, CJR's business section, and is the author of The Watchdog That Didn't Bark: The Financial Crisis and the Disappearance of Investigative Journalism (Columbia University Press, January 2014). Follow Dean on Twitter: @deanstarkman.