AAIS recently filed a comprehensive revision of
its Commercial Inland Marine (CIM) Program, an undertaking that
updates the policy forms and rating information for the commercial
classes traditionally subject to filing requirements (see sidebar on
page 21).
While the update is significant for many
insurers’ operations, an observer could easily wonder why the
number of standard classes in inland marine insurance--both filed
and nonfiled--has remained essentially unchanged for decades.
This is the case even though the amount and
variety of property that could be insured under an inland marine
policy has grown substantially over the years.
For example, the revised AAIS CIM Program
includes an update for the traditional “Photographic Equipment”
class, but no separate class for video equipment or digital cameras
has arisen.
To understand why this is so, it is necessary to
review the history of inland marine and the current conditions that
affect the development of the line.
According to Robert Guevara, AAIS vice president
of inland marine, the notion of classifying certain types of
property into an inland marine “class” dates from the years when
“fire” and “marine” insurers were strictly separated by
regulation and practice.
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AAIS has initiated a countrywide filing of revised forms, endorsements, schedules, and manual for its Commercial Inland Marine (CIM) Program.
This program encompasses commercial inland marine classes traditionally subject to filing requirements, including Accounts Receivable, Camera and Musical Instrument Dealers, Floor Plan Merchandise, Jewelry Dealers, Mobile Equipment Dealers, Musical Instruments, Negative Film, Photographic Equipment, Physicians and Dentists Equipment, Signs, Theatrical Property, and Valuable Papers and Records.
Among other things, the revision modifies forms and endorsements to use more titles and paragraph breaks to designate conditions, limitations, and exclusions that apply to covered property.
The new format is consistent with that implemented in the 2004 revisions of the Inland Marine Guide for nonfiled classes. Because of this, companies will find that, in most cases, they can use a single amendatory endorsement in a state for both filed and nonfiled inland marine forms bundled into a package policy.
The format also complies with guidelines arising from a recent California supreme courts decision regarding clarity in policy provisions, as well as those established by the Oregon insurance department. The new countrywide format eliminates the need to maintain separate forms for Oregon.
Other enhancements to the program include:
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Incorporation of an updated definition of “collapse” where applicable;
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Addition of a standard pollution exclusion to each coverage part;
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Addition of resulting loss language (which broadens coverage) to various exclusions (animal nesting/ infestation/discharge, contamination/deterioration, mechanical breakdown, temperature/humidity, wear and tear, and weather);
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Introduction of an optional calendar date or time failure exclusion endorsement (in place of built-in exclusions originally developed to address the “Y2K” problem);
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Filing of updated schedules of coverages on behalf of companies, (previously placed on file for informational purposes only); and
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Modifications to various individual forms within classes.
For information on affiliating with AAIS for use of the Commercial Inland Marine Program or Inland Marine Guide, contact Rick Maka, director of marketing, at
rickm@AAISonline.com
or by calling 800-564-AAIS. |
Fire policy underwriting was (and remains)
heavily dependent on the characteristics of an insured location, and
did not adequately address exposures to high-value portable property
exposed to perils--particularly theft--away from insured locations.
Cameras, furs, jewelry, musical instruments, and
doctors and dentists equipment were examples of such property.
Inland marine classes, whether filed or nonfiled, were defined for
the purposes of insuring them.
In addition, inland marine classes were defined
for other types of property (accounts receivable, valuable papers
and records, signs, mobile equipment, and more) that were unique in
nature, mobile, or subject to constant change, and thus ill-suited
for standard “fire” coverage.
Before the age of consumer electronics, most
other personal property worth insuring was large, not easy to steal,
and typically covered under location-focused property policies.
Things had changed in the insurance business by
the time electronic technology made valuable portable property
commonplace.
The distinction between fire and marine
companies was practically eliminated, and much the same has happened
to the distinction between property and marine departments within
companies.
Along with that trend, portable personal
property is now commonly insured with other types of personal
property under the personal property limit of a commercial property
policy, subject to limitations for losses away from the insured
premises.
“Without a strict separation of marine and
property insurance, there is less of a call to define certain types
of property as belonging to a class,” says Guevara.
Another reason there has not been growth in the
number of inland marine classes is that some classes have adapted to
include new types of property that have developed over the years.
This is the case for electronic data processing,
a nonfiled class that emerged in the early years of the computer age
and now addresses exposures to Web sites and other forms of
electronic property not known when computers were introduced.
If there are no new standardized classes for
video equipment or digital cameras, says Guevara, the reason is that
whatever items are not covered under property policies can be
insured under the Photographic Equipment class.
It’s one thing to identify a category of
property as having unique exposures.
But, an inland marine “class” is not
established until three things are developed:
-
A distinct policy form for insuring the
property;
-
A distinct procedure for rating the policy;
and
-
Fields for data capture related to the
property in
statistical plans.
There is a cost to each of these, and the
benefits of defining a class have diminished as property policies
have broadened their coverage for personal property.
That is not to say that the process of
developing inland marine classes has stopped entirely, however.
As an example of classes potentially in
development, Guevara cites mobile medical equipment and electronic
equipment for agriculture.
At the request of AAIS inland marine affiliates,
Guevara’s team recently developed standard policy forms for
insuring such equipment.
For the time being, and perhaps indefinitely,
those forms will be included in the “Miscellaneous Floaters”
section of the AAIS Inland Marine Guide, the leading industry
resource of forms, rating procedures, underwriting guidelines, and
other information for the traditionally nonfiled classes.
If sufficient demand emerges for standardized
rating information for mobile medical and electronic equipment, they
may become classes of their own with rating procedures and data
reporting fields, says Guevara.
A question
of class
