Aon Risk Solutions, the global risk management business of Aon plc (NYSE: AON), and XL Group’s Bermuda Insurance Operations, XL Insurance (Bermuda) Ltd (“XLIB”), announced a new stand-alone integrated occurrence product called Catastrophic Integrated Occurrence or CAT IO. With up to $50 million of capacity, this product is designed to provide catastrophe coverage in the event of a large batch (integrated occurrence) event. This product is a result of collaboration between the health care practices of Aon and XLIB in an effort to address the needs of health care industry clients.

By basing CAT IO on the Bermuda XL 004 form, which has a proven history with respect to integrated occurrence claims, the new product will provide risk managers within the health care industry additional coverage for catastrophic claims.

"There have been an extraordinary number of batch incidents over the past few years in the health care industry due to clinical integration, which have come to light because of greater transparency and improved reporting mechanisms," says Annie Sousa, senior vice president with Aon Risk Solutions’ Broking Center in Bermuda. "This product, as a continuous policy, will allow a client to group together a series of related incidents, which often extend over considerable periods of time, into a single integrated occurrence, subject to one self-insured retention, helping to insure the health care system from a catastrophic batch event."

Carla Greaves, senior vice president, Chief Excess Casualty Underwriter, and Wesly Guiteau, senior vice president, Underwriting Manager, Healthcare at XLIB agree that XL-004 Policy Form offers a much broader level of batch coverage than the typical Claims Made and Captive Forms utilized for health care insurance programs.

"The XL-004 Policy Form Integrated Occurrence feature has been tested and has proven to respond effectively to health care risks. In fact, 70 percent of health care claims paid by XLIB have been on the basis of integrated occurrences," notes Greaves.

There are various options for integrating CAT IO into a casualty insurance or reinsurance program:

— Top up: CAT IO sits on top of the current program, providing pure catastrophe cover in the event of a large batch claim.
— Difference in Condition: Excess and DIC of current tower, the integrated occurrence language will drop down DIC to the required level to pick up coverage where the underlying batch coverage in place does not.
— WRAP: Will sit alongside current single occurrence program and wrap the selected layer of coverage which does not contain any coverage for integrated occurrences
— Cloud Cover: A single limit sitting anywhere above the current hospital and physician professional liability program tower as pure catastrophe cover. This product does not need to be placed directly excess of the current program, but rather, can sit at whatever excess attachment point that meets with the specific client’s needs and comfort level.