October 14, 2009

The AAIS 
Inland Marine Guide


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PAUL BAIOCCHI TO BE KEYNOTE SPEAKER
AT MarketStance ANNUAL FALL SEMINAR

AAIS President Paul Baiocchi will be the keynote speaker at the second annual fall seminar sponsored by MarketStance, a firm that provides insurers with analytical services and demographic data on insurance markets and business segments.

The one-day seminar will be held Tuesday, Oct. 27, at MarketStance's headquarters in Middletown, Conn., about one-half hour south of Hartford. Baiocchi will be speaking on the use of analytics by small- and mid-sized insurers, and the organizations that serve them.

To reserve a spot at the seminar, contact Courtney Cydylo, MarketStance marketing associate, at ccydylo@marketstance.com, or by calling 800-704-6384. Hotel rooms are available at the Inn at Middletown, www.innatmiddletown.com.

AAIS REVIEWING MISSISSIPPI RULING
ON CONCURRENT CAUSATION

AAIS is reviewing a unanimous decision issued Oct. 8 by the Mississippi Supreme Court in Corban v. USAA, a much-watched case in the wake of Hurricane Katrina.

Among other things, the court held that separate perils occurring during a hurricane generally result in separate damage and loss. A jury will now decide what losses were caused by wind and which were caused by water.

The court concluded that the anti-concurrent causation provision of the USAA policy applies only when covered and excluded perils "contemporaneously converge" to cause damage to insured property. If the property is damaged separately by a covered and/or excluded peril, the provision is inapplicable.

AAIS is now reviewing the ACC language used in its forms to determine the extent to which changes may be in order.

Regarding other, related matters, the court:

  • Endorsed USAA's claims-handling policy following Hurricane Katrina. USAA paid for damage caused solely by wind but did not pay for damage caused by storm surge.

  • Affirmed USAA's legal argument that a jury should decide what losses, if any, were caused by wind, and what losses, if any, were caused by flood.

  • Found that the water damage exclusion in USAA's homeowners' policy clearly excludes storm surge.

  • Rejected the plaintiffs' argument that the homeowners' policy covers all damage caused by a hurricane, regardless of the cause.

PUNITIVE DAMAGE EXCLUSION
DEVELOPED FOR YACHT COVERAGE

At the end of October, AAIS will release a new punitive damages exclusion in the Yacht section of the Inland Marine Guide, a standard resource of forms, rating procedures, and underwriting guidelines for the traditionally nonfiled classes of inland marine insurance.

The new exclusion was developed in response to a recent U.S. Supreme Court ruling. The court ruled that injured crew members may be entitled to punitive damages even when there is coverage for their injuries under the Jones Act, a 1920 law that allows injured merchant sailors to sue vessel owners.

While the ruling specifically addresses liability under the Jones Act, the possibility exists for punitive damages associated with liability losses covered under the Guide's Yacht forms. The latest exclusion was developed to address that.

A punitive damages exclusion is currently available under the AAIS Boatowners Program, the country's first standardized program of policy forms and rating information for insuring small, privately owned watercraft.

For information on affiliating with AAIS for use of the Inland Marine Guide or Boatowners Program, contact Rick Maka, director of marketing, at rickm@AAISonline.com, or by calling 800-564-AAIS, ext. 222.

AAIS TO FILE REVISED
LOSS ESTIMATES SUPPLEMENT
FOR COMMERCIAL LIABILITY

AAIS has filed a revised Commercial Liability loss estimates supplement, otherwise known as information for '(a)' rated risks. The supplement has been filed in 27 states that require it to be filed and made available in others; the effective date in all states will be June 1, 2010.

The supplement provides estimated loss information for approximately 360 classifications for which there are no loss costs in the most recent version of AAIS's countrywide Commercial Liability manual. (The manual includes over 1,170 risk classifications in all.)

The latest loss estimate supplement includes a new feature indicating the relative degree of credibility for loss estimates provided under each class. Companies affiliated for the AAIS Commercial Liability Program can use the AAIS loss estimates in developing their own risk-specific rating information.
 

WISCONSIN INSTITUTES
DISCLOSURE REQUIREMENT FOR
AUTO MED PAY AND UM/UIM COVERAGE

An emergency order from the Wisconsin Office of the Commissioner of Insurance implements a new disclosure requirement for companies writing commercial general or umbrella liability insurance with auto coverage limited to non-owned and hired autos.

Under the order, insurers must disclose to applicants and insureds whether a commercial general liability (CGL) or umbrella policy covering only non-owned/hired autos provides coverage for auto medical payments, uninsured motorists, or underinsured motorists. The disclosure must be made in writing either on an application form or included with the delivery of a policy.

But, under the regulation, insurers are not required to provide uninsured/underinsured (UM/UIM) motorist coverage or auto medical payments coverage on CGL or umbrella policies which limit auto liability coverage to non-owned and hired vehicles.

In light of the regulation, AAIS will continue to provide non-owned/hired auto liability coverage endorsements under seven of its programs, but those endorsements do not have policy language, rules, or rating information for UM/UIM or auto medical payments coverage.

Those programs are: Agricultural General Liability, Artisans, Businessowners, Commercial Liability, Farmowners, Homeowners, and Mobile-Homeowners (in the last three, the endorsements are for the Home-Based Business Coverage Part).

The AAIS Commercial Umbrella, Farm Umbrella, and Personal Umbrella programs include endorsements that provide UM and/or UIM coverage if:

  1. Auto coverage, other than hired and non-owned auto coverage, is included in the underlying insurance; and

  2. The umbrella UM/UIM coverage is accepted by the insured.

Regarding coverage for medical payments, the Wisconsin order refers to the type of "med pay" typically found in auto policies, which is coverage for injury to permitted occupants of an insured auto. AAIS policies do not offer this type of coverage, and program users will have to disclose that.

 (The med pay coverage in AAIS policies is the type found in standard non-auto liability policies; it pays for relatively low-cost injuries to third parties, whether the insured is liable or not.)
Transmitted by the American Association of Insurance Services, 1745 S. Naperville Road, Wheaton, IL 60189.
 


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