Wheaton, Ill., Jan. 24, 2008—A national insurance advisory organization has introduced innovations in its model rating procedures for two key construction classes of inland marine insurance.

The American Association of Insurance Services (AAIS) recently issued revised rating procedures for the Builders' Risk and Installation Floaters sections of its Inland Marine Guide, a leading resource of forms, rating procedures and underwriting guidelines for traditionally nonfiled classes.

Builders' risk insurance (sometimes known as "course of construction" insurance) refers to property insurance for structures being erected; installation floater coverage refers to property insurance for fixtures or equipment and related exposures being installed in structures.

For both classes, the Guide's rating procedures introduce a new risk characteristic, called "fire potential," for determining the basic load for a risk. "Fire potential" includes but expands upon consideration of private fire protection measures (such as use of extinguishers) to consider various factors regarding a risk's use of heat and flame in its operations. Special criteria for rating fire risk are grouped into three categories: water supply; debris and combustible materials; and other considerations.

In addition, the Guide's revised rating procedures introduce a new method for rating earthquake coverage by utilizing the Modified Mercalli Intensity (MMI) scale, which measures the average intensity of earthquakes in an area. Construction features are also considered when determining the earthquake load.

In its rating procedures for these classes, the Inland Marine Guide provides structured series of risk considerations and suggested rating factors, but underwriters rely on their own discretion and company underwriting guidelines, and are generally free in most states to modify the Guide's procedures. (A few states require filing and approval of inland marine rating plans, even for traditionally nonfiled classes.)

For information on affiliating with AAIS for use of the Inland Marine Guide, contact Rick Maka, director of marketing, at rickm@AAISonline.com, or by calling 800-564-AAIS.