The AAIS Agricultural General Liability Program

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The AAIS AgriculturalGeneral Liability Program

• November 13, 2008
• AUDIO NOTES
• We encourage you to listen to the audio portion
  of the presentation through your telephone. We
  believe the sound quality is better through
  phones, and you will have an opportunity to raise
  questions verbally at the end of the
  presentation.
• To connect to the audio by telephone, click on
  the symbol in the audio bar of your tool
  panel, and follow the instructions.
• If you prefer to listen to the audio portion
  through your computer speakers, please note that
  you will not be able to raise questions verbally
  unless you have a microphone.
• All participants can raise questions in writing
  by using the question function provided in the
  tool panel.

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Todays Speakers

• Debi Summerlin, CPCU -- Vice President,
  Insurance Lines
• Sherry Taylor, CPCU -- Manager, Farm/
  Agribusiness

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Seminar Outline

• AAIS Farm Ag Products The Lineup
• Designing our latest Farm/Ag Product
• Objectives of the Agricultural General Liability
  Program (AgGL)
• Overview of the Forms and Manual
• Policy Issue
• Packaging Other Approaches
• Questions and Closing

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AAIS Farm and Ag Programs

• Farmowners
• Farm Umbrella
• Farm Monolines
• Farm Inland Marine
• Farm Properties
• Farm Personal Liability
• Commercial Liability Coverage (Farm Premises
  Operations), AAIS Commercial Liability Program
• Agricultural Output
• Introducing Agricultural General Liability
• The Next Rounds
• 2nd Quarter 2009 Comml Farm/Ag Umbrella Forms
• 4th Quarter 2009 FO Property Forms Repositioned

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AAIS Product Attributes

• Forms can be packaged with non-AAIS forms
• Programs must accommodate automation and
  integration into company operations
• Coverages must be adaptable to a diverse array of
  risks
• Programs must be structured to allow easy
  customization for unique company needs.

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Industry Issues

• Changing Nature of Agriculture
• Agritainment and agritourism
• Size and number
• Vertical integration

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New Program Objectives

• The ag range of operations
• Traditional farming
• Personal liability for farm residents
• Custom/contract farming
• Contract feeding operations
• Farm management operations
• Annuals
• Perennials
• Agribusiness processing operations
• Agribusiness warehousing or storage operations
• Vertically integrated operations
• Agritainment/agritourism activities

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New Program Objectives

• Combine personal, farm, and commercial on a
  single policy
• Class combinations
• Limits do not stack

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New Program Objectives

• Solution for the ag range of operations in a
  single program
• Policy tailor-made to reflect individual risk
  exposures
• Manual organization is user-friendly
• 300 classifications

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New Program Specifics

• Two base forms
• Farm Commercial Liability Coverage Form
• Agribusiness Commercial General Liability
  Coverage Form
• Bodily Injury and Property Damage
• Medical Payments
• Personal and Advertising Injury
• Fire Legal Liability
• Farm Chemicals Limited Liability
• Short-term Rented Premises

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Basic Forms

• Commercial-type categories of insureds
• Insured, spouse, and residents under 21 if the
  insured is an individual
• Insured, spouse, partner/member and his/her
  spouse if insured is a partnership or joint
  venture,
• Insured, and members/managers if insured is an
  LLC
• Insured, executive officers, directors, and
  stockholders if a corporation

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Basic Forms, cont.

• Farm Commercial Liability Coverage Form
• Farming defined
• Planting, growing, and harvesting of crops
• Management, operation, and maintenanceof a farm
  enterprise
• Breeding, raising, and feeding animals
• Preparation but not processing
• Roadside stands
• Effectively excludes agritourism/agritainment
• Certain animal and vehicle exposures excluded
• Custom farming defined
• Businesses not described on the declarations
  excluded

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Basic Forms, cont.

• Agribusiness Commercial General Liability
  Coverage Form
• GL terms
• Farming and custom farming not defined, but can
  be accommodated
• Built-in exclusions include (not limited to)
• Lead
• Silica
• CAN-SPAM
• Asbestos
• CCA (chromated copper arsenate)
• Controlled substances
• TSE and Foot and Mouth
• Logging and lumbering
• Migrant and seasonal workers
• Discharge by aircraft
• Fungus

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Coverage Options

• Personal Liability Coverage option
• Farm Employers Liability and Medical Payments
  Coverage
• Employment Practices Liability Coverage
• Employee Benefits Liability Coverage

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Endorsements

• Exclusion Failure to Supply
• Product/Completed Work Hazard Expanded
  Definition
• Erroneous Delivery or Mixture
• Exclusion Products/Completed Work Coverage
• Exclusions for Designated Products, Services,
  Work, and Premises

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Customization

• Farm Chemicals Limited Liability
• Aircraft Crop Dusting
• Pollution
• Cross Suits Exclusions
• Additional Insureds
• Contaminated Products
• Custom Feeding
• Designated Equipment Activities

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Accompanying Manual

• 13 Rules
• Description of manual
• Eligibility
• Program description
• Policywriting instructions
• Deductibles
• Additional interests
• Risk classification
• Premium development
• Coverage options
• Commodity price stabilization plan
• Individual Risk Premium Modification
• Experience Modification Plan
• Terrorism

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Classifications

• 21 subsections
• Animals including Equine and Exotics or
  Specialties
• Processing, including Meat, Fish, Seafood, or
  Poultry, Crops, Fruits and Vegetables
• Storage
• Services
• Farming and Farming by Contract
• Lawn and Garden
• Lumber and Timber
• Manufacturing
• Personal or Farm-Related
• Product Sales
• Special Events and Tourist Activities

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Classifications

• 300 classifications
• Separate products/completed work loss costs for
  most classes
• Farming
• based on sales and commodity utilization
• commodity price fluctuation tool
• Counterparts to commercial
• Most sales based, but a few payroll based
• A few converted from payroll to sales
• Newly introduced

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FARM COMMERCIAL LIABILITY COVERAGE AAIS

DECLARATIONS AL 6501 09 08 Page 1 of 1
Named Insured John and Pipp
Appleseed Mailing Address W
8800 County Highway 96 Policy Period
06/01/2009 - 06/01/2010
Hortonville, WI 54944 1201
am standard time at mailing address shown

Agent Name and Address
Dale Insurance

P.O. Box 1
Dale, WI 54944 Business
Description Apple Farm
The insured is X
Individual ? Partnership ? Joint Venture ?
Limited Liability Company ? Trust ?
Organization (Describe) Limits of
Liability Each Occurrence Limit 1,000,000
Medical Payments Limit
5,000 any one person Fire Legal
Liability Limit 50,000 each occurrence
Short-term Rented Premises Limit
25,000 any one premises Personal and
Advertising Injury Limit
1,000,000 any one person or organization General
Aggregate Limit 2,000,000 Products/Completed
Work Hazard Aggregate Limit 2,000,000 Farm
Chemicals Limited Liability Aggregate Limit
25,000 Custom Farming Annual
Receipts 5,000 Location of all
premises owned, rented, occupied, or controlled
by the insured 10 acres Sec 1, TWP X, RGE Y 25
acres Sec 2, TWP X, RGE Y



Loss Cost Classification Code No.
Rating Basis Rating Base
Prem/Ops All
Other Total Premium Crops - Consumption
82415 S
500,000 Personal Liability 82801
FU
1 1-2 Family Owned ATV
82853 U
1 U-Pick - No Off Ground 82241
S 10,000
Bakeries - 81802
S
25,000 Including Baking On Premises
Other Premium
To Equal Minimum
Total
Advance Premium Audit Period ? Annually
? Semi-Annual ? Quarterly ? Monthly
Deposit Premium
FORMS AND ENDORSEMENTS CL 0100, AL 0001, AL
0170, AL 0290, AL 8005
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Usage

• Policy construction
• Common policy conditions
• State amendatory
• Other endorsements required by the state to amend
  coverage terms
• Packaged with stand-alone property forms

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Packaging

• To create a package policy with property
  coverages provided under
• An AAIS program AgOP, Farm Properties, or
  Farmowners
• Another bureau program
• An independent program

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Packaging

• With property marine coverages under the AAIS
  Agricultural Output (AgOP) Program
• Use the AgOP/AgGL Common Policy Conditions, CL
  0100, and CL amendatory endorsement (s)
• Use all other AgGL forms, endorsements, rules,
  and rating information and
• Consider filing a Package Policy Discount rule
  and factor.

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Packaging

• With property coverages under the AAIS Farm
  Properties Program
• File a new FL state amendatory endorsement to
  introduce commercial cancellation terms
• Omit AgGL Common Policy Conditions, CL 0100 and
  CL amendatory endorsement and
• Use all other AgGL forms, endorsements, rules,
  and rating information.

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Packaging

• With property coverages under the AAIS Farmowners
  Program
• File expanded version of FO Rule 2.3.3, Other
  Liability Coverage Parts, to support use of
  forms AL 0001/AL 0002, AL endorsements, and
  corresponding rating info
• File new FO state amendatory endorsement
  (commercial) to omit liability terms (AL state
  amendatory endorsement used instead)
• Omit AgGL Common Policy Conditions, CL 0100, and
  CL amendatory endorsement and
• Credit the FO premium to delete built-in FPL
  rate consideration.

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Packaging

• With another bureau or independent farm package
  program featuring separate property and liability
  forms
• File a rule to support use of forms AL 0001/AL
  0002, AL endorsements, and corresponding rating
  info
• Determine if other program Common Policy
  Conditions are integrated or stand-alone to
  evaluate use of CL 0100 and CL amendments
• Continued

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Packaging

• With another bureau or independent farm package
  program (continued)
• Determine if state amendatory endorsement(s)
  combine property and liability amendments into
  single endorsement and create revised
  endorsements as needed and
• Determine if other program features separate
  rating information for property and liability
  coverages and modify other program rating
  information as needed.

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Another Approach

• Filing action not required
• Issue existing package policies or property
  policies with integrated common conditions in
  tandem with a monoline AgGL policy . Examples
• AAIS Farmowners Policy, liability coverage
  deleted use commercial cancellation terms
• AAIS Farm Properties Policy
• Other Industry Farm Policy, property coverage
  only

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• Questions?

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For further information

• Joyce Tignino, Vice President,Marketing and
  Industry Relations
• joycet_at_AAISonline.com
• 800-564-AAIS
• Thanks for your participation today!