My advice to AIG clients is to sit tight.

Over the past few days I have received calls from clients, reporters, analysts, and insurance people.

Yes, this is a mess. AIG has some work to do. The offer of loans will help. There will be some changes that need to be made.

However, AIG’s insurance business (the normal stuff) is healthy with a reasonable (based on the current shape of the industry) loss ratio and profitability.

Recall also that the insurance operations of AIG is segregated into hundreds of separate insurers. What happens in one segment does not necessarily affect others.

Pulling out of a policy now will involve penalties and effort that probably will not pay off. Regulators are watching and will step in at some point if things go further south.

State guarantee funds are available if actual losses occur (not a perfect solution, but a help). There is also the idea that another insurer would buy the obligations of AIG.

Too much is up in the air to make a switch mid stream.

Renewals are a different matter. Certainly consider the AIG situation as you look to renew a policy.