AIG to Offer Expanded Coverage to U.S., Canada Railroads

Wall Street Journal | October 9, 2014 | Column by Tess Stynes

Insurer Says It Has Expanded Excess Casualty Liability Limits to $1 Billion per Occurrence

American International Group Inc. said it is expanding its excess casualty liability limits for railroads in the U.S. and Canada in response to demands of North America's largest rail companies.

The move comes amid record traffic and growing shipments of potentially hazardous materials, such as crude oil, AIG said in a news release.

The insurer said it has expanded excess casualty liability limits for Class 1 railroads in the U.S. and Canada to $1 billion per occurrence. AIG said the 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.

"Rail companies need additional coverage to help protect their balance sheets," said Jeremy Johnson, president and chief executive of AIG's Lexington Insurance Co. affiliate.

A series of derailments has dogged the rail sector, which is increasingly moving oil over its tracks as regulators weigh stricter rules for crude-by-rail shipping.

Meanwhile, oil companies and railroads have been uniting to fight some proposed federal rules on oil-train safety after a year of pointing fingers at each other over explosive accidents.

Federal regulators already have made some changes on the operation of oil trains, including imposing new speed limits of 40 miles an hour in populated urban areas and 50 mph elsewhere. Oil companies and railroads want to keep those restrictions in place, and have asked the Transportation Department not to slow speeds further, warning that doing so could snarl traffic across the entire U.S. freight system.

Initially conceived of as a stopgap measure until pipelines could be constructed and plagued by high-profile safety problems, crude by rail has nevertheless become apermanent part of the nation's energy infrastructure, industry-watchers say.

It is a similar story in Canada: the amount of crude moving by rail has quadrupled since 2012, and is forecast to more than triple between now and 2016.

Write to Tess Stynes at tess.stynes@wsj.com

http://online.wsj.com/articles/aig-to-offer-expanded-coverage-to-u-s-canada-railroads-1412862437

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AIG to Offer Expanded Coverage to U.S., Canada Railroads
PAUSE, People of Albany United for Safe Energy
PAUSE is a grassroots group of individuals who have come together to promote safe, sustainable energy and fight for environmental justice. We engage the greater public to stop the fossil fuel industry’s assault on the people of Albany and our environment.