AIG expands excess casualty liability limits for U.S., Canada railroads

American International Group, Inc. (AIG) announced Thursday that it has expanded excess casualty liability limits for Class 1 railroads in the United States and Canada to $1 billion per occurrence.

The coverage for catastrophe losses would be in excess of $1.5 billion in underlying limits, and AIG says that it is one of the largest capacities offered to the rail industry by a single insurer.

“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,” according to its release issued Wednesday.

“The Association of American Railroads has reported U.S. rail demand is at a 7-year high,” it noted. “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%.”

Derailments are the most common type of accident risk faced by Class 1 railroads in the U.S. and Canada, AIG added.

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.