With costs for energy rising, there may be renewed interest in shipping by more by rail and less by truck when considered economically viable, according to a new report by the Inland Marine Underwriters Association (IMUA) Transportation Committee.
The 11-page report notes that one freight train can replace more than 70 trucks and drivers on a 2,200-mile route. The report, written by IMUA Associate Member Anthony O’Brien, B.Bus Dip F.S., Transportation Insurance Underwriter – National Transport Insurance of Australia, highlights key information needed for underwriters involved in railroad rolling stock and transportation. O’Brien noted that average cost of a railway vehicle claim is eight times higher than the average truck claim in Australia.
While the report, “Australian Rail Insurance,” has an Australian flavor, many of the ideas and concepts presented are transferable to U.S. exposures.
For insurers, the report lists the necessary facts to gather when insuring rolling stock. Some of the basic information includes the years, make, models, identification numbers and values of the railroad transport equipment to be insured. More specific information would include total values shipped each year for the past five years, accident history, total number of claims, limits required from ground up and description of loss each year for the past five years for all claims contribute to intelligent underwriting.
The policy limits of coverage required include the following:
Any one rail ‘consist’ (maximum combined unit value);
Own damage accumulation any one loss on any one track;
Own damage accumulation any one loss at any one terminal;
“Hook n pull” limit any one loss for non-owned locomotives and wagons in control;
Hired in equipment;
Hired out equipment;
Removal of debris excluding freight;
Any excess freight removal of debris in excess of any marine policy; and
Downtime/loss of revenue per month and the maximum period required.
Details of all locations, but specifically terminal locations, as well as their construction, fire protection and security are vital. Other data needed to underwrite rail risk: freight type, annual tonnage hauled, full details of any dangerous goods including routes, overall routes, details of shared traffic, number of trains per week by route, total miles per week, values per train, average and maximum speed, night operations and internal fatigue management programs.
For more information about the Australian Rail Insurance Report, contact Lillian Colson at IMUA, 14 Wall Street, Suite 820, New York, NY 10005. Tel.: (212) 233-0550. Fax: (212) 227-5102. IMUA is the national association for the commercial inland marine insurance industry.
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