The American Association of Insurance Services (AAIS) is initiating a countrywide filing of a revised, expanded commercial umbrella program. The program’s policy forms will be filed with a proposed effective date of Sept. 1, 2011; a sample manual will also be available for companies that affiliate with AAIS for use of the program.
Under the revised programs, insurers will have a choice between two base forms for writing excess and umbrella liability coverage for a risk.
One of the two forms is an updated version of the form available under the existing AAIS program. That form provides excess coverage for damage and injuries covered by underlying insurance. It also includes umbrella coverage that applies in excess of a retained limit for a limited range of exposures that may not be covered by underlying insurance.
A new umbrella form, introduced with this revision, provides coverage in excess of the limits of underlying insurance. Under the new AAIS umbrella form, the policy exclusions for most exposures are not automatically subject to ‘following-form’ exceptions. In this way, the coverage provided by the umbrella policy can be controlled by the umbrella underwriter, rather than be driven by the terms of underlying policies.
“The new, additional form suits the carrier that wants to write the umbrella layer on its own terms rather than be guided by the terms in the underlying policies,” says Anthony Leist, AAIS assistant vice president of commercial lines. “One program will provide two structured alternatives for writing a risk.”
In addition to the base forms, the AAIS Commercial Umbrella Program includes a wide range of endorsements developed to provide companies with the ability to broaden or restrict coverage as needed.
The sample manual provides factors for arriving at an initial premium based on the premiums for underlying policies. That premium can be modified using risk variation criteria encompassing loss experience, loss control, risk management, and other criteria.
AAIS is a national insurance advisory organization that develops policy forms and rating information used by more than 600 property/casualty insurers throughout the U.S. AAIS actuarial, product development, and compliance specialists maintain forms and manuals for 26 lines of personal, commercial, farm, and inland marine insurance.