AIG expands liability limits to $1 billion

This coverage for catastrophe losses would be in excess of $1.5 billion in underlying limits and is one of the largest capacities offered to the rail industry by a single insurer.

AIG said it is responding to the demands of North America’s largest rail companies contending with record rail traffic and the growing number of rail cars carrying potentially hazardous materials, such as crude oil. The Association of American Railroads (AAR) has reported U.S. rail demand is at a seven-year high. AAR also reported U.S. Class I railroads (including the U.S. Class I subsidiaries of Canadian railroads) transported more than 407,000 carloads of crude oil in 2013, up from 9,500 carloads in 2008, an increase of nearly 4,300%.

“These expanded limits are another way AIG’s scale and innovation is meeting the needs of our critical infrastructure clients and the customers they serve,” said Russ Johnston, president, Casualty Americas. “The Class I railroads are seeing strong growth and a resulting increase in risks they need to cover.”

Derailments are the most common type of accident risk faced by Class I railroads in the U.S. and Canada, and they can be caused by a wide range of factors.

“Rail companies need additional coverage to help protect their balance sheets,” said Jeremy Johnson, president and chief executive officer, Lexington Insurance Company. “This billion-dollar coverage will help Class 1 railroads address expanding risks while continuing to serve the growing needs of transportation customers in North America.”

The excess coverage is provided by Lexington Insurance Company and other affiliated AIG Companies.