Inland Marine Insurance Considerations for Compliance New England AICP E-Day May 9, 2008 ● Durham, N.H. Joseph S. Harrington, CPCU, ARP Director, Corporate Communications American Association of Insurance Services 1745 So. Naperville Road | Wheaton, IL 60187 Phone: 800-564-AAIS ● www.AAISonline.com

AAIS and Inland Marine A long history Filed inland marine programs Mutual Marine Conference Transportation Insurance Rating Bureau 1975: American Association of Insurance Services Multi-line advisory organization 23 personal, commercial, farm, and inland marine programs Filed inland marine programs Commercial Inland Marine Personal Inland Marine Farm Inland Marine Inland Marine Guide for nonfiled classes Forms, rating procedures, underwriting guidelines Used by 200 insurers, inc. major national carriers

The nature of the line “Inland Marine”: A contradiction in terms? Departure from ocean (“wet”) marine Custody of insured property Competition with “fire” insurance Less regulated rates More “all risk” policies The Nationwide Definition, 1933; last updated 1976 Imports and exports Domestic shipments Instrumentalities of transportation and communication Specified household property (jewelry, furs, etc.) Specified business property (mobile equipment, property under bailment, etc.)

The nature of the line, cont. Risks where change is constant Transportation from region to region Use of equipment under different conditions Buildings in the process of being constructed Portable property that moves about, or “floats” Electronic data in constant flux Liability insured as property Bailees, motor truck cargo, warehouse operators Property owner gives custody to the insured Insurer often has a right, not an obligation, to assist defense of claim

Inland marine “classes” A line of many lines, called “classes” What makes a “class”? A distinct policy form A distinct procedure for rating Fields for data capture in stat plans Filed vs. “nonfiled” classes An evolution in practice and expectation How many homogenous exposures? How many unique exposures?

Why file the ‘nonfiled’ classes? AAIS advocates nonfiled status Many states do not exempt inland marine Companies required to file Companies asked AAIS to file States asked AAIS to file

The Inland Marine Guide filing Forms in 24 states Filed on behalf of companies that grant AAIS filing authorization Rating procedures in five states Filed on an advisory basis Companies must take additional filing action Only in states that expressly require filing Only classes expressly required to be filed

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