1. Forms
2. IL
3. IL-09-22

What the form is

The IL 09 22, titled "Retrospective Premium Endorsement - Exclusion Of Aviation Exposures," is an endorsement used to modify an insurance policy that is subject to retrospective premium rating. Its primary function is to remove specific aviation-related exposures from the scope of the retrospective premium calculation. When this endorsement is attached, any losses, payroll, sales, or other exposure bases attributable to the described aviation activities are not included when determining the final premium under the retrospective rating plan.

Classes of business it applies to

This endorsement is relevant for businesses that have some form of aviation exposure but have chosen to cover that exposure separately or wish to isolate its impact from their primary retrospective rating program. This could apply to a variety of industries:

• Manufacturing Companies: A business that owns or operates aircraft for corporate travel, where the primary operations (e.g., manufacturing risks) are subject to a retrospective premium plan, but the aviation risk is preferred to be handled outside of it.
• Agricultural Operations: Large farms or agricultural businesses that utilize aircraft for activities like crop dusting or aerial surveying, but whose main workers' compensation or liability coverages are retrospectively rated.
• Construction Projects: Large-scale construction projects that might use helicopters or other aircraft for transport or specialized tasks, where the project's overall insurance is on a retro plan, but the aviation component is carved out.
• Any insured with a retrospective rating plan that has incidental or significant aviation exposures they wish to exclude from that plan's calculations, perhaps due to specialized aviation underwriting, separate aviation insurance policies, or the unique and potentially volatile nature of aviation risks.

Special considerations

• Underlying Retrospective Plan: This endorsement is only applicable when a retrospective premium plan is already in effect for one or more lines of coverage (e.g., Workers' Compensation, General Liability, Commercial Auto).
• Specificity Required: The endorsement typically requires a schedule or clear description of the aviation exposures being excluded to avoid ambiguity.
• Alternative Coverage: It's crucial to ensure that the excluded aviation exposures are adequately covered elsewhere, either through a dedicated aviation insurance policy or another specific risk financing mechanism. Excluding it from the retro plan means it's not covered by that plan's premium adjustments.
• Premium Impact: The premium for the excluded aviation exposures will need to be determined separately from the retrospective premium calculation. This might involve a specific charge or the premium from a standalone aviation policy.

Key information for agents and underwriters

• Risk Assessment: Underwriters must carefully evaluate the nature and extent of the aviation exposures being excluded. Even if excluded from the retro calculation, these exposures are part of the insured's overall risk profile. The rationale for exclusion should be understood (e.g., covered under a specialized aviation policy with higher limits, or the exposure is too volatile for the existing retro plan).
• Pricing Adjustments: The parameters of the retrospective rating plan (e.g., minimum and maximum premiums, loss conversion factors) may need to be reviewed and potentially adjusted to reflect the removal of the aviation exposure. The premium for the excluded exposure must be accounted for separately.
• Potential for Gaps: Agents and underwriters should work with the insured to confirm that no unintended coverage gaps are created by excluding the aviation exposure. The interface between the retro-rated policies and any separate aviation coverage needs to be seamless.
• Documentation: Clear documentation of the excluded aviation exposures is essential in the policy and underwriting file to prevent misunderstandings at the time of a claim or premium audit.
• Regulatory Compliance: Ensure that the use of the endorsement complies with any state-specific regulations regarding retrospective rating and the exclusion of exposures.