St. Paul Seeks Changes in U.K. Rail Policies To Allow Subrogation

November 8, 2000

St. Paul International Insurance, a unit of the St. Paul Cos., Inc., which is one of the primary insurance carriers for the U.K. ‘s privatized railroad companies, is seeking a change in policy rules to permit subrogation claims for business interruption caused by the need for extensive repairs to the system following several recent train crashes.

Following the privatization of British Rail, train companies took over passenger and freight operations, and another company, Railtrack, was set up to run the infrastructure. St. Paul insures about 23 of the U.K.’s private operators, primarily for liability, but also carries about half the coverage for property and business interruption insurance.

According to a report from Reuters News Agency, David Bevan, St. Paul’s deputy general manager, warned that the recent accidents and the time needed to investigate them and reestablish the rail lines were dramatically increasing costs to the insurance industry.

“Unless we can get our money back from Railtrack where the delays are to do with infrastructure, or from the guilty party in the event of a rail crash, then we aren’t going to be able to carry on providing the cover and the deductibles at the sort of prices that we have in the past,” Reuters quoted Bevan as saying.

Under current rules subrogation claims against third parties for business interruption are not allowed, but with weather and maintenance related delays in repairing Britain’s aging rail system soaring, such claims have greatly increased. Bevan indicated that if the situation doesn’t improve, St. Paul might be forced to exit the market.

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