The AAIS Agricultural General Liability Program

1. 1 THE AAIS AGRICULTURAL GENERAL LIABILITY PROGRAM The AAIS AgriculturalGeneral Liability Program November 13, 2008 AUDIO NOTES: We encourage you to listen to the audio portion of the presentation through your telephone. We believe the sound quality is better through phones, and you will have an opportunity to raise questions verbally at the end of the presentation. To connect to the audio by telephone, click on the “+” symbol in the audio bar of your tool panel, and follow the instructions. If you prefer to listen to the audio portion through your computer speakers, please note that you will not be able to raise questions verbally unless you have a microphone. All participants can raise questions in writing by using the question function provided in the tool panel.

2. 2 THE AAIS AGRICULTURAL GENERAL LIABILITY PROGRAM Today’s Speakers Debi Summerlin, CPCU -- Vice President, Insurance Lines Sherry Taylor, CPCU -- Manager, Farm/ Agribusiness

3. 3 THE AAIS AGRICULTURAL GENERAL LIABILITY PROGRAM Seminar Outline AAIS Farm & Ag Products – The Lineup Designing our latest Farm/Ag Product Objectives of the Agricultural General Liability Program (AgGL) Overview of the Forms and Manual Policy Issue Packaging & Other Approaches Questions and Closing

4. 4 THE AAIS AGRICULTURAL GENERAL LIABILITY PROGRAM AAIS Farm and Ag Programs Farmowners Farm Umbrella Farm Monolines Farm Inland Marine Farm Properties Farm Personal Liability Commercial Liability Coverage (Farm Premises & Operations), AAIS Commercial Liability Program Agricultural Output Introducing: Agricultural General Liability The Next Rounds: 2nd Quarter 2009: Comm’l Farm/Ag Umbrella Forms 4th Quarter 2009: FO Property Forms Repositioned

5. 5 THE AAIS AGRICULTURAL GENERAL LIABILITY PROGRAM AAIS Product Attributes Forms can be packaged with non-AAIS forms Programs must accommodate automation and integration into company operations Coverages must be adaptable to a diverse array of risks Programs must be structured to allow easy customization for unique company needs.

6. Industry Issues Changing Nature of Agriculture Agritainment and agritourism Size and number Vertical integration THE AAIS AGRICULTURAL GENERAL LIABILITY PROGRAM 6

7. 7 THE AAIS AGRICULTURAL GENERAL LIABILITY PROGRAM New Program Objectives The ag range of operations Traditional farming Personal liability for farm residents Custom/contract farming Contract feeding operations Farm management operations Annuals Perennials Agribusiness processing operations Agribusiness warehousing or storage operations Vertically integrated operations Agritainment/agritourism activities

8. 8 THE AAIS AGRICULTURAL GENERAL LIABILITY PROGRAM New Program Objectives Combine personal, farm, and commercial on a single policy Class combinations Limits do not stack

9. 9 THE AAIS AGRICULTURAL GENERAL LIABILITY PROGRAM New Program Objectives Solution for the ag range of operations in a single program Policy tailor-made to reflect individual risk exposures Manual organization is user-friendly 300+ classifications

10. 10 THE AAIS AGRICULTURAL GENERAL LIABILITY PROGRAM New Program Specifics Two base forms Farm Commercial Liability Coverage Form Agribusiness Commercial General Liability Coverage Form Bodily Injury and Property Damage Medical Payments Personal and Advertising Injury Fire Legal Liability Farm Chemicals Limited Liability Short-term Rented Premises

11. 11 THE AAIS AGRICULTURAL GENERAL LIABILITY PROGRAM Basic Forms Commercial-type categories of insureds Insured, spouse, and residents under 21 if the insured is an individual Insured, spouse, partner/member and his/her spouse if insured is a partnership or joint venture, Insured, and members/managers if insured is an LLC Insured, executive officers, directors, and stockholders if a corporation

12. 12 THE AAIS AGRICULTURAL GENERAL LIABILITY PROGRAM Basic Forms, cont. Farm Commercial Liability Coverage Form Farming defined Planting, growing, and harvesting of crops Management, operation, and maintenanceof a farm enterprise Breeding, raising, and feeding animals Preparation but not processing Roadside stands Effectively excludes agritourism/agritainment Certain animal and vehicle exposures excluded Custom farming defined Businesses not described on the declarations excluded

13. 13 Basic Forms, cont. Agribusiness Commercial General Liability Coverage Form GL terms Farming and custom farming not defined, but can be accommodated Built-in exclusions include (not limited to) Lead Silica CAN-SPAM Asbestos CCA (chromated copper arsenate) Controlled substances TSE and Foot and Mouth Logging and lumbering Migrant and seasonal workers Discharge by aircraft Fungus

14. 14 THE AAIS AGRICULTURAL GENERAL LIABILITY PROGRAM Coverage Options Personal Liability Coverage option Farm Employers’ Liability and Medical Payments Coverage Employment Practices Liability Coverage Employee Benefits Liability Coverage

15. 15 THE AAIS AGRICULTURAL GENERAL LIABILITY PROGRAM Endorsements Exclusion – Failure to Supply Product/Completed Work Hazard – Expanded Definition Erroneous Delivery or Mixture Exclusion – Products/Completed Work Coverage Exclusions for Designated Products, Services, Work, and Premises

16. Customization Farm Chemicals Limited Liability Aircraft Crop Dusting Pollution Cross Suits Exclusions Additional Insureds Contaminated Products Custom Feeding Designated Equipment Activities THE AAIS AGRICULTURAL GENERAL LIABILITY PROGRAM 16

17. 17 THE AAIS AGRICULTURAL GENERAL LIABILITY PROGRAM Accompanying Manual 13 Rules Description of manual Eligibility Program description Policywriting instructions Deductibles Additional interests Risk classification Premium development Coverage options Commodity price stabilization plan Individual Risk Premium Modification Experience Modification Plan Terrorism

18. Classifications 21 subsections Animals including Equine and Exotics or Specialties Processing, including Meat, Fish, Seafood, or Poultry, Crops, Fruits and Vegetables Storage Services Farming and Farming by Contract Lawn and Garden Lumber and Timber Manufacturing Personal or Farm-Related Product Sales Special Events and Tourist Activities THE AAIS AGRICULTURAL GENERAL LIABILITY PROGRAM 18

19. Classifications 300+ classifications Separate products/completed work loss costs for most classes Farming based on sales and commodity utilization commodity price fluctuation tool Counterparts to commercial Most sales based, but a few payroll based A few converted from payroll to sales Newly introduced THE AAIS AGRICULTURAL GENERAL LIABILITY PROGRAM 19

21. 21 THE AAIS AGRICULTURAL GENERAL LIABILITY PROGRAM Usage Policy construction Common policy conditions State amendatory Other endorsements required by the state to amend coverage terms Packaged with stand-alone property forms

22. THE AAIS AGRICULTURAL GENERAL LIABILITY PROGRAM

23. Packaging To create a package policy with property coverages provided under: An AAIS program – AgOP, Farm Properties, or Farmowners Another ‘bureau’ program An independent program THE AAIS AGRICULTURAL GENERAL LIABILITY PROGRAM 23

24. Packaging With property & marine coverages under the AAIS Agricultural Output (AgOP) Program: Use the AgOP/AgGL Common Policy Conditions, CL 0100, and CL amendatory endorsement (s); Use all other AgGL forms, endorsements, rules, and rating information; and Consider filing a Package Policy Discount rule and factor. THE AAIS AGRICULTURAL GENERAL LIABILITY PROGRAM 24

25. Packaging With property coverages under the AAIS Farm Properties Program: File a new FL state amendatory endorsement to introduce commercial cancellation terms; Omit AgGL Common Policy Conditions, CL 0100 and CL amendatory endorsement; and Use all other AgGL forms, endorsements, rules, and rating information. THE AAIS AGRICULTURAL GENERAL LIABILITY PROGRAM 25

26. Packaging With property coverages under the AAIS Farmowners Program: File expanded version of FO Rule 2.3.3, Other Liability Coverage Parts, to support use of forms AL 0001/AL 0002, ‘AL’ endorsements, and corresponding rating info; File new FO state amendatory endorsement (commercial) to omit liability terms (‘AL’ state amendatory endorsement used instead); Omit AgGL Common Policy Conditions, CL 0100, and CL amendatory endorsement; and Credit the FO premium to delete ‘built-in’ FPL rate consideration. THE AAIS AGRICULTURAL GENERAL LIABILITY PROGRAM 26

27. Packaging With another bureau or independent farm package program featuring separate property and liability forms: File a rule to support use of forms AL 0001/AL 0002, ‘AL’ endorsements, and corresponding rating info; Determine if other program Common Policy Conditions are ‘integrated’ or ‘stand-alone’ to evaluate use of CL 0100 and CL amendments; Continued … THE AAIS AGRICULTURAL GENERAL LIABILITY PROGRAM 27

28. Packaging With another bureau or independent farm package program … (continued) Determine if state amendatory endorsement(s) combine property and liability amendments into single endorsement and create revised endorsements as needed; and Determine if other program features separate rating information for property and liability coverages and modify other program rating information as needed. THE AAIS AGRICULTURAL GENERAL LIABILITY PROGRAM 28

29. Another Approach Filing action not required Issue existing ‘package’ policies or property policies with integrated common conditions in tandem with a monoline AgGL policy . Examples: AAIS Farmowners Policy, liability coverage deleted; use commercial cancellation terms AAIS Farm Properties Policy Other Industry Farm Policy, property coverage only  THE AAIS AGRICULTURAL GENERAL LIABILITY PROGRAM 29

30. 30 Questions? THE AAIS AGRICULTURAL GENERAL LIABILITY PROGRAM

31. 31 For further information Joyce Tignino, Vice President,Marketing and Industry Relations joycet@AAISonline.com 800-564-AAIS Thanks for your participation today!