American International Group, Inc. announced that it has expanded excess casualty liability limits for Class 1 railroads in the U.S. and Canada to $1 billion per occurrence. This coverage for catastrophe losses would be in excess of $1.5 billion in underlying limits.
AIG 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 has reported U.S. rail demand is at a 7-year high. The Association also reported U.S. Class 1 railroads (including the U.S. Class 1 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 percent.
Derailments are the most common type of accident risk faced by Class 1 railroads in the U.S. and Canada, and they can be caused by a wide range of factors.
The excess coverage is provided by Lexington Insurance Company and other affiliated AIG Companies. Lexington is the largest domestic excess and surplus lines carrier in the U.S.
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