1

Property and Marine Insurance Underwriting

Experience of

Matthew Starr

2

Property Insurance

• Buildings

• Business Personal Property, Computers, Valuable Papers

• Business Income & Extra Expense

• Inland Marine Coverage's

• Equipment Breakdown

• Crime Coverage's

3

Property Insurance

• Multiple Time Element Coverage OptionsMultiple Time Element Coverage Options

• Electronic vandalism & computer virus coverageElectronic vandalism & computer virus coverage

• Other Inland Marine Coverage'sOther Inland Marine Coverage's

4

Ocean Marine Coverage’s

• Ocean Cargo• Boat Dealers• Marina Operators

Legal Liability• Commercial Hull- I.e.

sight-seeing, excursion and charter boats

• Protection & Indemnity

5

International Air Freight can be covered on an Ocean Cargo Insurance Policy!

6

“Ocean” Cargo Insurance in KS & MO?

How much cargo does Kansas export?

How much cargo does Missouri export?

7

“Ocean” Cargo Insurance in Kansas?

In 2005, Kansas Exports were $6.7 Billion!

Top Destinations: Canada, Mexico, & China.Top Cargo Exported: Aircraft & Parts, Industrial Machinery, Vehicles, Raw Hides/Skins, Electrical

Machinery, Cereals, Meat, Optic & Medical Instruments.

Imports are in addition to the above!

8

“Ocean” Cargo Insurance in Missouri?

In 2004, Missouri Exports were $8.9 Billion!

Top Export Destinations: Canada, Mexico, Japan, China & United KingdomTop Cargo Exported: Transportation Equipment, Chemicals, Machinery, Computer/electronics, Electrical Equipment, Food Products, Metal Products, Agricultural Products, & Plastic goods.

Imports are in addition to the above!

9

“Warehouse to Warehouse”

Shipments are not covered just from port to port onlyThey are covered while in the ordinary course of transit from the warehouse at the place of origin to the warehouse at the place of destination.

Ocean Cargo-Warehouse to WarehouseOcean Cargo-Warehouse to Warehouse

10

Example of a Warehouse to Warehouse Shipment

Warsaw, Poland

Wichita,KS

Baltimore, MD

Germany

11

Ocean Cargo Insurance- Policy Types

Open Policies, continous until cancelled, for ALL shipments…

Special Marine Policies or stray risk policy, for a SINGLE trip shipment

12

Ocean Cargo Insurance Options

Domestic Transit Warehouse CoverageExhibition & Processing

LocationsInstallation SitesSales Representatives

SamplesWar Insurance Policy

13

OCEAN CARGO in the News…The largest ocean cargo disaster...

On Nov. 2, 1998, the M/V APL CHINA was hit by Typhoon Babs in the North Pacific Ocean.Over $100,000,000 in cargo loss and damage. The vessel lost 406 containers overboard, and some 1,000 more were damaged.

14

Modern Day Pirates!

International Piracy Incidents

325 Piracy incidents in 2004

Indonesia, Bangladesh, India, South America, Nigeria, Malaysia are the highest in piracy incidents.

Question: What is the industry wide

ANNUAL dollars loss of cargo from THEFT?

15

Annual Cargo Theft Costs

$12 Billion…Second only to Health Care Fraud of $25 Billion

16

Container Ships…the largest up to 8,000 containers onboard!

17

• 95% of US shipments via water95% of US shipments via water

• 8,000,000 containers offloaded at U.S. 8,000,000 containers offloaded at U.S. seaports EACH year, that’s 21,000 per day!seaports EACH year, that’s 21,000 per day!

• Value of container trade through U.S. Value of container trade through U.S. seaports estimated at $737 Billion Annuallyseaports estimated at $737 Billion Annually

Ocean Cargo Shipments

18

Ocean Cargo Stray Risk Insurance

• Coverage for a SINGLE international shipment of goods.

• For example a manufacturer has a single import/export shipment.

19

Boat Dealer Coverage

• Premises coverage for boats as stock for sale.

• Transit coverage• Exhibition• Off premises coverage• Protection & Indemnity

20

Marina Operators Legal Liability Coverage

• Legal Liability and/or P&I Coverage for the boats of others for operations of:

• Fueling• Repair• Storage• Mooring• Slip rental• Storage• Demonstration• Hauling & Launching

21

Motor Truck Cargo Legal Liability- Carrier For Hire Coverage

Owned Goods on Owned VehiclesTransportation Coverage-Shippers

InterestTrip Transit Coverage

Transit Insurance

22

What kind of Insurance is needed for this package?

“I need Transportation Insurance

to protect my interest in my cargo

while being transported by others.”

“I need Motor Truck Cargo Insurance to protect

my legal liability for cargo of others while in my care,

custody and control.”

23

Motor Truck Cargo Legal Liability Insurance

Coverage for the insured’s legal liability in hauling cargo of others.

24

Motor Truck Cargo Legal Liability Insurance

OPTIONS• Scheduled vehicles or blanket

reporting gross receipts

• Cargo at Scheduled Terminal Locations

• Mechanical Breakdown of Refrigeration Units

25

Motor Truck Cargo- Owned Goods/Vehicles

• Coverage for owned goods in transit on owned vehicles.

• Scheduled Vehicles

• Blanket- Reporting basis

26

Coverage to protect the Shippers Interest in their cargo transported by others

For example, a manufacturer or distributor shipping goods via common carrier truck lines.

Transportation Insurance-Shippers Interest

27

Why Shippers Need their OWN Transportation Insurance

• Truckers are liable for cargo damage if Truckers are liable for cargo damage if negligent, but NOT responsible for all causes negligent, but NOT responsible for all causes of loss (I.e. Acts of God, poor packing, etc.)of loss (I.e. Acts of God, poor packing, etc.)

• Under a released bill of lading, trucker only Under a released bill of lading, trucker only responsible for lower value instead of full responsible for lower value instead of full value.value.

• Trucker liability is reduced if goods stored in Trucker liability is reduced if goods stored in warehouse for extended time. warehouse for extended time.

• Time/Difficulty in collecting from the trucker.Time/Difficulty in collecting from the trucker.

28

Modes of Transit & Coverage Options

Common Carrier TruckContract Carrier TruckAircraft ShipmentsRailroad ShipmentsOwned VehiclesAt Scheduled Terminal

29

Transportation Insurance

Incoming, Outgoing, Inter-plant ShipmentsCoverage for ALL Shipments during the

yearAnnual Reporting- Values Shipped or

Gross Sales

30

Trip Transit Coverage

• Coverage for a SINGLE shipment of goods from one location to another.

• For example a business is moving to a new location.

• Territory: within USA or Canada.

31

Contractors Equipment Coverage

32

Contractors Equipment Coverage

•Owned Scheduled Equipment

•Unscheduled small tools

•Unscheduled employee tools

33

Contractors Equipment Theft!

National Equipment Register- Theft Recovery & Risk Management

Theft most common cause of loss

As little as 10% of equipment is recovered

What’s the annual loss

from theft

of contractors equipment?

34

Contractors Equipment Theft!

Most Equipment Thefts by State: #1 TX, #2 NC, #3 CA, #4 FL….#8 MO

Most common stolen equipment: #1 skid steer loader-31%, #2 Tractor- 21%, #3 Backhoe 16%.

Est. Annual Values of Equipment Stolen

$300 Million to $1 Billion!

National Equipment Register

2004 Stats

35

Contractors Equipment Leased or Rented FROM Others

• Unscheduled leased or rented equipment from others

• Limit per ITEM and TOTAL limit.• Written lease or rental agreement

36

Contractors Equipment Rental Expense

• Coverage for rental expense incurred for replacement equipment...

• If a covered cause of loss occurs to covered equipment…

• Insured must use other equipment if available…

• and use reasonable speed in obtaining repairs or replacement equipment.

• Deductible in hours, I.e. 48 or 72 hours.

37

Contractors Equipment Exposures & Options

• Leased or rented equipment TO others

• Borrowed equipment from others

• Underground equipment

• Waterborne equipment

38

Contractors Equipment Crane Exposures!

• Crane- exclusion for exceeding the lifting capacity or overload

• Crane- exclusion or restricted coverage for booms and jibs

39

Crane Upset, Overturn & Overload!

BOOM!

40

Contractors Equipment Insurance Limit Considerations

• Blanket Limits- Annual Adjustment Blanket Limits- Annual Adjustment EndorsementEndorsement

• Valuation- ACV, Replacement CostValuation- ACV, Replacement Cost

• Coinsurance- agreed amount, 80%, 90%, Coinsurance- agreed amount, 80%, 90%, 100%100%

• Review equipment SCHEDULE- are items Review equipment SCHEDULE- are items covered/excluded, does the limit agree covered/excluded, does the limit agree with the valuation clause and with the valuation clause and coinsurance?coinsurance?

41

Builders Risk CoverageBuilders Risk Insurance

42

Builders Risk Coverage

•New Buildings under construction

•Remodeling or renovations, with or without existing building

•Temporary storage locations

•Materials in transit

•Flood and Earthquake

•Equipment Breakdown-Testing

•Soft Costs and Loss of Rents

•Permission to Occupy

43

Crane Collapse and Builders Risk Disaster!

44

Builders Risk OR Installation Insurance?

Builders Risk Insurance

covers the ENTIRE PROJECT for buildings or structures in the course of construction for the owner and/or contractor plus sub-contractors. It can include structures being remodeled or renovated.

45

Builders Risk OR Installation Insurance?

Installation Insurance

is designed to cover a PORTION of the project, normally for contractors who install electrical, plumbing, heating, air conditioning or other machinery and equipment.

46

Builders Risk Testing Coverage

• Hot and cold testing: electrical, mechanical, hydrostatic, pneumatic testing of equipment.

• Mechanical breakdown, explosion of boilers, pipes, engines, turbines, pressure vessels, etc.

• Artificially generated electricity including arcing. • Construction contracts often have insurance

requirements for “Testing” or “Boiler & Machinery” coverage.

47

What kinds of equipment are exposed to testing loss for a builders risk?

• Air conditioning system, compressor, chiller, etc.

• Electrical system, transformer, lights, panels, switchgear, power controls.

• Underground cables• Heat and hot water boilers• Building automation systems• Elevators, fire detection systems

48

Soft Costs CoverageADDITIONAL expenses (as below) sustained from a delay in the completion of construction operations due to a covered cause of loss.

Interest expense on money borrowed to finance construction or reconstruction,

Real estate taxes, Advertising and promotional expenses, Commissions, legal and accounting costs Architectural fees, building inspection fees and

charges and administration expenses,

(Hard costs= “brick & mortar”)

49

Builder’s Risk Coverage Away from the Jobsite Options

Transit Coverage-- limit per shipment

Temporary Storage Location- away from the jobsite, limit per location.

50

Installation Coverage

•Installation of machinery, equipment, and property at jobsite

•Temporary storage location

•Materials while in transit

•Flood and Earthquake

•Soft Costs

•Equipment Breakdown-Testing

51

Computer & Electronic Equipment InsuranceComputer & Electronic Equipment Insurance

52

Computer & Electronic Equipment Coverage

Computer EquipmentSite Control SystemsElectronic Equipment-

Phones, Fax, etc.Data/mediaInstruction & Operating

ManualsValuable Papers

53

Computer & Electronic Equipment Coverage

Extra & Expediting Expense

Business Income Mechanical BreakdownFlood and EarthquakeTransit & Off PremisesWorldwide Laptop

Coverage

54

Computer Equipment Additional Benefits

Off Premises Utility FailureNo Coinsurance Replacement CostUpgrade Value-OptionComputer Virus

55

Bailees Customers Coverage

• Property of others in the insureds care, custody or control.

• For example machines of others, are repaired by the insured.

56

Communications Equipment

• Radio or TV Towers and Antennas

• Transmitting & Studio Equipment

• Mobile Equipment

• Cable TV Systems

• Business Income

57

Dealers Coverage

• For miscellaneous equipment dealers, such as antique or fine art stock for sale.

• Excluding dealers of boats, construction equipment, or jewelry.

• Premises Coverage• Transit Coverage• Away from premises coverage

58

Exhibition Coverage

• Property at an exhibition or trade show • For example, trade show booths, displays,

models, etc. • Coverage at the exhibition• Transit to and from the exhibition• Single exhibition or ALL during the year

59

Equipment Dealers Coverage

• For construction equipment or agricultural equipment, stock for sale

• Premises Coverage

• Transit coverage• Away from premises coverage

60

Fine Arts Coverage

• Paintings, sculptures, and other works of art

• SCHEDULED Fine Arts on premises.

• Transit coverage

• Away from premises coverage

• Breakage Coverage

61

Medical Diagnostic Equipment Coverage

• Mobile or stationary medical diagnostic equipment

• MRI’s

• Computer Equipment

• Media and Data

• Business Income

• Extra & expediting expense

• Computer virus

• Transit coverage

• many more benefits

62

Miscellaneous Property Coverage

Inland Marine Form for Miscellaneous Equipment, Machines or Property where no other specific form is available.

63

Miscellaneous Property Coverage

- Examples of covered property:

• Vehicle driving simulators• Service equipment• Uniforms• Audio-visual equipment, projectors, VCR’s• Banners, decorations, and flags• Cameras, televisions and video equipment• Cleaning or maintenance equipment• Equipment leased or rented from others

64

Miscellaneous Property Coverage

- Examples of covered property:

• Golf carts, bicycles and ATV’s• Industrial equipment• Lawn and grounds keeping equipment• Auto Models or portable displays • Portable or permanent signs• Portable Radios, walkie talkies

65

Miscellaneous Property Coverage

- Examples of covered property:

• Metering equipment, • Tents• Tools, lathes and shop equipment• Typewriters, photocopiers, office

equipment • Truck or vehicle scales

66

Scientific Instruments Coverage

•Portable Equipment AND Equipment permanently attached to a vehicle for...

•Industrial, environmental, and pollution monitoring equipment…

•Medical and scientific testing and monitoring equipment…

•Engineering and surveying equipment.

67

Oil Lease Property

Coverage for Tanks, pumps and machinery at producing oil well sites.

68

Pipeline Distribution Coverage

• Pipeline and related metering systems.

• Excluding pipeline contents.

69

Physicians & Surgeons Equipment

• Medical, surgical or dental equipment and instruments.

• Optional: Office furniture, fixtures, improvements & betterments, office equipment away from premises, extra expense, personal effects, valuable papers, and money/stamps.

70

Processing Coverage

Property of the insured while processed by others.

71

Sign Coverage

• Neon,

• fluorescent,

• automatic or

• mechanical signs.

72

Theatrical Property Coverage

Theatrical props, costumes or scenery.

73

Vending Machine Coverage

• Vending Machines for established businesses.

• Excluding coins, money and contents.

74

Warehouseman’s Legal Liability

Commercial property stored by a warehouseman with a written contract.

75

Cameras & Musical Instruments

• Commercial Cameras and Photography Equipment

• Professional Musical Instruments

76

Marine Programs for a Group or Association

Marine exposures that warrant unique handling, coverage or services.

Examples: coverage for laptops, wireless communications devices, kiosk risks, ATM’s, and other mobile property.

77

Marine Programs for a Group or Association

Available to GROUPS or SELECTED INDUSTRIES such as:

• Associations & Risk Purchasing Groups• Manufacturers & Wholesaler Operations• Schools & Universities• Communication and Technology Businesses• Legal & Medical Firms• Plastics & Metalworkers Operations• Business Services & Financial Companies

78

Marine Programs for a Group or Association

Marine Insurance Programs are available to include as covered property:

• cell phones and personal communications equipment

• Laptops, palmtops and PDA’s• Global positioning systems and security related

equipment• ATM’s or financial information exchange equipment• Mobile or office equipment• International air and ocean shipments.