The AEGIS excess liability policy has formed the foundation of the excess liability program at member companies for more than 30 years. Our consistent $35 million limit and collaborative claims services are unmatched in the commercial insurance market. In recent years, however, changes in certain legal jurisdictions and the absence of an annual policy aggregate have allowed members to make multiple, full-limit excess liability claims within a single policy year. The resulting losses to the Company, combined with the lingering effects of the capital market meltdown in late 2008, have had a negative effect on policyholder surplus.
AEGIS Management and the RMAC have recognized the potential danger of providing this type of unlimited coverage in the future and, as many of you know, we formed an Excess Liability Aggregate Limits Task Force in 2009 to study and develop options that would allow members to maintain the broad, consistent coverage provided by the excess liability policy while allowing AEGIS to remain financially sound. We are grateful for the considerable amount of time and expertise the task force devoted to this important matter.
As the result of the task force efforts, the RMAC and Management agreed AEGIS should place a $35 million per occurrence/$70 million annual aggregate limit (or twice the per occurrence limit, if lower) on the excess liability policy. This will put a finite limit on the policy no matter how many “occurrences” are reported.
In order to allow proper planning and arrangement of coverages in excess of AEGIS programs, the aggregate will take effect with excess liability policies renewing on and after January 1, 2011. We will provide additional details in the months ahead, including a detailed presentation on the subject at the Policyholders' Conference in July.