AAIS Offers Terror Loss Costs Info

Insurers writing small-business coverage will soon have access to new information for rating terrorism coverage, an advisory organization that develops policy forms and rating information announced.

American Association of Insurance Services in Wheaton, Ill., said this month it will initiate a countrywide filing of new business owners policy (BOP) manual supplements that include new terrorism loss costs and rating factors.

The new rating information, which has a proposed effective date of Oct. 1, AAIS said, will address losses arising from both “certified” acts covered with federal reinsurance and “noncertified” acts of terrorism.

It will also address terrorism losses that occur after termination of the federal terrorism reinsurance program of the Terrorism Risk Insurance Act. Although the law is scheduled to expire at year's end, a number of measures that would extend the coverage for different periods are pending in Congress.

The new loss costs, AAIS said, apply to property loss, including business interruption, and are based on modeled data developed by a catastrophe modeling firm, which AAIS did not identify.

Within several states, those loss costs will vary according to newly defined terrorism rating territories delineated by ZIP codes, AAIS explained.

Earlier this year, AAIS noted that it had filed model-based terrorism loss costs with ZIP code-based territories under its Commercial Properties Program.

In addition, AAIS said it is filing revised rating factors to be used in calculating the liability component of BOP premium for terrorism coverage. Procedures for developing the property and liability components, which are combined to determine the total BOP terrorism premium, are provided in the manual supplements.

AAIS said its forms and rating information are used by more than 600 U.S. property-casualty companies.

Information on affiliating with AAIS for use of its Business Owners Program, is available by contacting Rick Maka, director of marketing, at rickm@AAISonline.com or calling 800-564-AAIS.