Wheaton, Ill.-based American Association of Insurance Services (AAIS) has developed a new rating plan for adding earthquake coverage to policies based on standardized forms, manual rules, and rating information provided under the AAIS Homeowners Program.
The new plan consists of revised rules, rating zones, loss costs, premium modification factors, and supplementary rating information, plus a revised homeowners earthquake coverage endorsement.
The rating information features state-wide loss cost base amounts and factors that vary by rating zone to reflect a risk’s location, policy form, construction type, and deductible percentage. Premium modification factors for the owner-occupied forms also reflect a structure’s age, number of stories and (for certain structures) features designed to mitigate earthquake loss.
The earthquake loss costs and rating factors were developed through use of the “USQUAKE” model developed by EQECAT. USQUAKE has undergone independent review by the U.S. Geological Survey, California Geological Survey, and Pacific Earthquake Engineering Center. The California Earthquake Authority has declared the model to be suitable for public rate filings.
The new earthquake rating plan will be filed as state-specific Homeowners earthquake supplements; proposed effective dates will range from Jan. 1 to July 1, 2010.
AAIS is a national insurance advisory organization that develops standardized policy forms and rating information used by more than 600 property/casualty insurers of all sizes throughout the United States. More than 150 carriers use the AAIS Homeowners Program as the basis of their homeowners product. For information, e-mail: rickm@AAISonline.com.
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