January 25, 2006

REVISED BOP MANUAL
WITH FACTOR RATING 
APPROVED IN GEORGIA

The Georgia Office of Commissioner of Insurance has issued the first approval of the revised AAIS Businessowners manual.

The new manual, which is being filed countrywide with effective dates ranging from June 1, 2006 to early 2007, introduces loss cost base amounts, relativity factors, and factor rating procedures. Those features can be used as an alternative to tables of computed loss costs, which are still provided.

The factor rating information was developed to simplify the process of loading Businessowners rating information into policy rating systems. When used with the factor rating premium determination rule provided, the loss cost base amounts and relativity factors will produce loss costs identical to those in the tables of computed loss costs.

BULLETINS ISSUED ON
TERRORISM CLARIFICATIONS

AAIS commercial lines and farm affiliates were issued bulletins last week clarifying the application of the revised federal Terrorism Risk Insurance Program to certain types of insurance. These include:

• Crime insurance available or automatically provided under AAIS programs;

• Commercial auto coverage endorsed onto AAIS-based Artisans, Businessowners, or Commercial Liability policies, and covered under the AAIS Farm Umbrella and Commercial Umbrella/Excess Liability programs;

• Incidental professional liability coverage available under the AAIS Businessowners and Commercial Liability programs; and 

• Insurance for farm exposures whose premium is reported under annual statement categories other than "farm multi-peril."

Regarding the last point, the U.S. Treasury Dept. has clarified that insurance on farm exposures that is reported as "fire," "allied lines," or "other liability" is still reinsured under the federal terrorism backstop, and thus subject to requirements to offer insureds coverage for "certified" acts of terrorism.

Treasury Dept. clarifications came in response to AAIS questions raised in a conference call meeting summarized in a press release.

MASSACHUSETTS ISSUES NOTICE
ON IDENTIFYING COMPANIES ON POLICIES

The Massachusetts Division of Insurance recently issued a memorandum clarifying how insurers are to comply with laws mandating that the company assuming insurance be clearly identified on a policy.

The memo states that insurers can satisfy the requirement by putting the company name on a policy jacket or declarations page (if used as the first page of a policy) and placing it on file with the department. Companies that do not use jackets or declarations, or who do not place them on file, are required to put the company name on all forms and endorsements.

In all cases, the corporate name of the company assuming the insurance must be listed; the use of marketing or group names alone are not sufficient to comply.

Companies need to review their jackets and declarations and determine what, if any, filing action is needed.

'EXECUTIVE LEADERSHIP' IS FOCUS OF 
2006 AAIS ANNUAL CONFERENCE

"Executive Leadership: Decision-Making in a Dynamic Environment" is the theme of the 2006 AAIS Annual Conference, April 9-11 at The Ritz-Carlton in Sarasota, Florida. To register,

This conference is designed to provide information and guidance to property/casualty executives faced with a growing demand to make more decisions, more quickly, in a market with more uncertainty and complexity. Our speakers include the following:

• Professor J. Edward Russo of Cornell University will lead a half-day session on effective decision-making. Each registrant will receive a complimentary copy of his book Winning Decisions: Getting It Right The First Time.

• Ernst Csiszar, president of the Property Casualty Insurers Association of America (PCI), will address a range of public decisions facing the industry. 

• Matthew Josefowicz, manager of the global insurance group for the research and consulting firm Celent, will speak on the future of insurance technology.

• John Lucker, principal, and Jim Marino, director, Deloitte Consulting, will speak on the growing use of new predictive analytics (e.g., scoring) for underwriting small commercial accounts.

Also, a panel of company executives is being formed to share insights on decisions they have made to position their companies for success. Other speakers may be invited as the event approaches.

Social events at the conference include a golf outing at the Legacy Golf Club in Bradenton, a spouse/guest tour of the Ringling estate, and a closing reception and dinner at The Ritz-Carlton Members Beach Club.

For more information, contact Joe Harrington, director of corporate communications, at joeh@AAISonline.com or by calling 800-564-AAIS.