Boiler and Inspection Insurance

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WILLIAM D. HAGER
BOILER AND INSPECTION INSURANCE
SUMMARY OF MOST PERTINENT EXPERTISE

Boiler and Inspection Insurance (Boiler Insurance). When I use this term or its equivalent in this document, I mean insurance that provides coverage for physical damage to and financial loss from equipment breakdown and related inspections. Boiler insurance,1 also called equipment breakdown insurance, covers the cost of repairing or replacing the damaged equipment and business losses incurred from the equipment not functioning and related inspections. This type of insurance can cover a wide range of equipment, including HVAC systems, ovens, boilers and furnaces, refrigeration units, elevators, and office equipment. Insureds purchase this type of insurance to protect equipment much in the same way that property insurance covers buildings and liability insurance third party injuries. Property insurance policies often exclude coverage for mechanical breakdown of machines such as boilers.

How Boiler and Inspection Insurance is Offered in the Market. In the past, boiler insurance was provided by insurance companies through a free-standing policy. Today however, an increasing numbers of insurance companies provide boiler insurance as an endorsement. For example, Insurance Services Office, Inc., has filed an “Equipment Breakdown Protection Coverage Form”, providing boiler and boiler inspection coverage, among others.

Further, boiler insurance can be provided by a primary insurer when it issues a policy directly to its insured or as a reinsurer of a primary insurer when that primary insurer does not have the underwriting or claim expertise needed to provide direct coverage for boiler insurance exposures.

1 Brief Summary of my Applicable Expertise.

Boiler Insurance and Inspection Expertise: State Regulatory.My expertise as to these matters can be found as follows: I am a former:

  • Commissioner of Insurance (Iowa), as appointed by the Governor of Iowa;
  • First Deputy Commissioner of Insurance, as appointed by the Commissioner of Insurance;
  • Assistant Attorney General assigned on a full-time basis assigned to the Department of Insurance (Iowa),2 as appointed by the Attorney General of Iowa; and
  • Administrative Law Judge, f/k/a Hearing Officer.

In those capacities, on a daily basis, I had full regulatory oversight and responsibility for: (i) the nature of commercial general liability and property policies and in particular the Equipment Breakdown Coverage endorsement relating thereto and the insurers who issued such coverages; (ii) insurers who perform safety and jurisdictional inspectional services of boilers and related matters;3 and (iii) the obligations and responsibilities of such insurers in regard to these matters.4

Boiler Insurance and Inspection Expertise: National Regulatory Insurance.My expertise as to these matters can be found as follows: I am a former:

  • Member of the National Association of Insurance Commissioners (NAIC), and
  • Member of its Executive Committee,
  • As a Member of the Executive Committee, I had legislative oversight over all committees, including the so-called “B” Committee, that is, the Property and Casualty Committee, which had oversight over most all Boiler insurance issues that relate to regulation.

In those capacities, on a daily basis, I had national regulatory oversight and responsibility for: (i) the nature of commercial general liability and property policies and in particular the Equipment Breakdown Coverage endorsement relating thereto and the insurers who issue such coverages; (ii) insurers who perform safety and jurisdictional inspectional services of boilers and related matters; and (iii) the obligations and responsibilities of such insurers in regard to these matters.

Boiler Insurance and Inspection Expertise: Most Recent Legislative.In addition to my regulatory background at both the state and national level, I have served or am serving in the following capacities, each of which included daily knowledge of and interaction with Boiler insurance as it related to: (i) the nature of commercial general liability and property policies and in particular the Equipment Breakdown Coverage endorsement relating thereto and the insurers who issue such coverages; (ii) insurers who perform safety and jurisdictional inspectional services of boilers and related matters; and (iii) the obligations and responsibilities of such insurers in regard to these matters.

  • Elected Member of the Florida House of Representatives (most recent past) where I have served as a Member and Vice Chairman of the Insurance Committee (among other committees), which has legislative oversight over all insurance operations in the state (as administered by the Florida Office of Insurance Regulation) including those relating to Boiler insurance and policies and inspections and related claims;
  • In addition, I have sat on and served as Vice Chairman of the Civil Justice Subcommittee of the Florida House (along with a number of other Committees6) which has responsibilities as to Florida laws that establish (among other things) liability, which is of course the foundation to Boiler insurance liability obligations.

Boiler Insurance and Inspection Expertise: Prior Legislative Experience.In addition to my regulatory background at both the state and national level and my current legislative service, I have served or am serving in the following capacities, each of which included daily knowledge of and interaction with Boiler insurance as it relates (i) the nature of commercial general liability and property policies and in particular the Equipment Breakdown Coverage endorsement relating thereto and the insurers who issue such coverages; (ii) insurers who perform safety and jurisdictional inspectional services of boilers and related matters; and (iii) the obligations and responsibilities of such insurers in regard to these matters.

  • Legal Counsel to the Iowa House of Representatives;
  • Chief of Staff at the U.S. House of Representatives,
  • Elected Member of the Boca Raton City Council; Deputy Mayor of the City of Boca Raton, where I served as the Council’s lead on insurance issues;

Boiler Insurance Expertise: Industry. In addition to my regulatory background at the state and national levels and my current and prior legislative background as to boiler insurance and related inspections, I have served or am serving in the following capacities, each of which included daily knowledge of and interaction with the U.S. property casualty industry in the following ways:

  • President and Chief Executive Officer of the National Council on Compensation Insurance (NCCI), a major U.S. property casualty insurance company domiciled in Florida and doing business throughout the United States which employs about 1,000 personnel. While CEO, this position entailed responsibility for formulating policy forms and gaining their approval by Commissioners of Insurance throughout the U.S. During my tenure as CEO, NCCI filed for approval by Commissioners of Insurance some $100 billion of proposed premium for workers compensation insurance.

Boiler Insurance and Inspection Expertise: Industry/ Actuarial. In addition to my regulatory background at both the state and national level and my legislative background both current and prior and my industry background, I have also served or am serving in the following actuarial capacities, each of which included daily knowledge of and interaction with boiler insurance and inspections in the following ways: (i) the nature of commercial general liability and property policies and in particular the Equipment Breakdown Coverage endorsement relating thereto and the insurers who issue such coverages; (ii) insurers who perform safety and jurisdictional inspectional services of boilers and related matters; and (iii) the obligations and responsibilities of such insurers in regard to these matters.

  • American Academy of Actuaries, Washington, D.C., (whose members are often intimately involved in boiler insurance from a pricing standpoint) where I served as General Counsel and Chief Lobbyist;
  • Actuarial Standards Board (ASB), Washington D.C. I served as general counsel to the Interim Actuarial Standards Board (IASB), the forerunner of the ASB. ASB is the standards setting organization of the actuarial profession and runs parallel to the Financial Accounting Standards Board (FASB) of the accounting profession.
  • National Council on Compensation Insurance, Boca Raton, Florida. From an actuarial standpoint, as President and CEO of NCCI, I had responsibility to determine the most appropriate rates for workers compensation coverages throughout most of the U.S. on a state by state basis, as approved by the various Commissioners of Insurance. During my tenure, I had responsibility for rate making as to about $100 billion of such premium. The actuarial division of NCCI totaled about 150 persons, both credentialed actuaries and support personnel.
  • Commissioner of Insurance/ First Deputy Commissioner of Insurance. From an actuarial standpoint, as Commissioner and as First Deputy, I had responsibility to approve (and disapprove as the case might have been) rate filings, including their full actuarial support for all property casualty coverages, all of which required prior approval.
  • Degree in Mathematics. In addition, I hold a B.A. in mathematics (secondary mathematics education) and am conversant with these matters in that capacity.

Boiler Insurance and Inspection Expertise: Insurance Arbitration. In addition to my regulatory background and my legislative background and my industry background and my actuarial background as to Boiler insurance, I am serving in the capacity of an insurance arbitrator, which requires knowledge of and interaction with Boiler insurance in the following ways: (i) the nature of commercial general liability and property policies and in particular the Equipment Breakdown Coverage endorsement relating thereto and the insurers who issue such coverages; (ii) insurers who perform safety and jurisdictional inspectional services of boilers and related matters; and (iii) the obligations and responsibilities of such insurers in regard to these matters.

  • Nationally Certified Insurance Arbitrator (ARIAS-US), where I sit as an arbitrator on disputes between (among others) insurers and other insurers and enter decisions as to Boiler insurance;

Boiler Insurance Expertise: Reinsurance Arbitration. In addition to my regulatory background and my legislative background and my industry and my insurance arbitration background as to boiler insurance, I am serving in the capacity of a reinsurance arbitrator, which requires knowledge of and interaction with boiler insurance in the following ways: (i) the nature of commercial general liability and property policies and in particular the Equipment Breakdown Coverage endorsement relating thereto and the insurers who issue such coverages; (ii) insurers who perform safety and jurisdictional inspectional services of boilers and related matters; and (iii) the obligations and responsibilities of such insurers in regard to these matters.

  • Nationally certified Reinsurance Arbitrator (ARIAS-US), where I sit as an arbitrator on disputes between (among others) insurers and their reinsurers and enter decisions as to Boiler insurance;

Boiler Insurance and Inspections Expertise: Current Legal Experience. In addition to my regulatory and industry and legislative and reinsurance background, I have served or am serving in the following legal capacities, each of which included daily knowledge of boiler insurance in the following ways: (i) the nature of commercial general liability and property policies and in particular the Equipment Breakdown Coverage endorsement relating thereto and the insurers who issue such coverages; (ii) insurers who perform safety and jurisdictional inspectional services of boilers and related matters; and (iii) the obligations and responsibilities of such insurers in regard to these matters. As stated, I have not entered legal expert opinions; however, I set out the below experience as part of my aggregate experience as to Boiler insurance:

  • I am an attorney admitted to practice in Florida, Illinois7 and Iowa (all upon examination) with an insurance and reinsurance practice;
  • Practicing attorney (currently) in Boca Raton, Florida at the Hager Law Firm, with a practice limited to insurance and reinsurance law.

Boiler Insurance and Inspection Expertise: Prior Legal Experience. In addition to my regulatory and industry and legislative and actuarial and insurance and reinsurance arbitration background and my current legal background, I have served or am serving in the following legal capacities, each of which included daily knowledge of Boiler insurance in the following ways: (i) the nature of commercial general liability and property policies and in particular the Equipment Breakdown Coverage endorsement relating thereto and the insurers who issue such coverages; (ii) insurers who perform safety and jurisdictional inspectional services of boilers and related matters; and (iii) the obligations and responsibilities of such insurers in regard to these matters.

As stated, I do not entered legal expert opinions in connection with my work as an expert witness; however, I set out the below experience as part of my aggregate experience as to boiler insurance and related inspections:

  • Legal Counsel to the Iowa House of Representatives;
  • Assistant Attorney General (Iowa);
  • Practicing attorney at Hager & Schachterle, Des Moines;
  • Iowa Counsel to the Property Casualty Insurance Association of America (PCIAA), the U.S. trade association of smaller property casualty stock insurance companies, many of whom sell boiler insurance;
  • Legal Counsel to the Professional Insurance Agents of Iowa (property casualty insurance agents, who sell among other products, boiler insurance);
  • Legal Counsel to the Iowa Association of Life Underwriters (life, health and annuity insurance agents).
  • General Counsel and Chief Lobbyist to the American Academy of Actuaries (as above), whose members are often involved in Boiler insurance matters, particularly from a pricing and policy language standpoint;

Boiler Insurance and Inspections Expertise: Undergraduate Education as a Bases for Expertise. In addition to my regulatory experience at the state and national level, my legislative, industry, actuarial, arbitration and legal background, my undergraduate educational background has also prepared me to provide boiler expertise as follows:

  • Bachelor’s degree: Mathematics8 – University of Northern Iowa;

Boiler Insurance and Inspections Expertise: Graduate Education as a Bases for Expertise. In addition to my regulatory experience at the state and national level, my legislative, industry, actuarial, arbitration and legal background and my undergraduate educational background – my graduate educational background has also prepared me to provide boiler expertise as to insurers as follows:

  • Master’s degree: Educational Psychology, University of Hawaii; and
  • Juris Doctorate degree (law degree) from the University of Illinois, Champaign;

Boiler Insurance and Inspections Expertise: Licenses as a Bases for Expertise. In addition to my regulatory experience at the state and national level, my legislative, industry, actuarial, arbitration and legal background and my educational background, my licenses also show applicable expertise as follows:

  • Bar Admission: U.S. Supreme Court;
  • Bar Admissions, the states of Iowa, Illinois and Florida, all by examination;

Boiler Insurance and Inspection Expertise: Insurance Certifications as a Bases for Expertise. In addition to my regulatory experience at the state and national level, my legislative, industry, actuarial, arbitration and legal background and my educational background, insurance certifications also show applicable expertise as follows:

  • Certified U.S. Reinsurance Arbitrator;
  • Certified U.S. Insurance Arbitrator;

Boiler Insurance and Inspection: Overall Statement as to Expertise and Websites. In the aggregate, these experiences have given me a significant grounding to provide expert Boiler insurance testimony. Further detail as to my boiler insurance expertise can be reviewed at my websites as follows:

With each of these to be read in conjunction with my curriculum vitae as available elsewhere on this website.

1 Sometimes in the industry called boiler and machinery insurance and sometimes, boiler and inspection insurance.

2 Functioning as the Department’s general counsel.

3 Whether as the primary insurer or as the reinsurer.

4 Because the boiler insurance business is conducted across state lines and more specifically, nationally, the rules and regulations (by whatever name) are substantially similar state over state. My point is that my experience as Commissioner of Insurance in Iowa, along with the balance of my regulatory positions there, was substantially similar to parallel experience and positions in the balance of the states. This experience is bolstered by my 45 years of direct insurance experience, including that of being a CEO of a major property casualty entity doing business throughout the U.S., and my eight years of experience as an elected Member of the Florida House of Representatives where I have served on the Insurance Committee and served as well on its upstream parent committee, the Commerce Committee, with statutory and legislative oversight over the boiler insurance and inspection business, which, as stated, is regulated in Florida much as it is elsewhere in the U.S. My term in the Florida House ended as of 01/01/2019 due to term limits.

6 Including that as Chair of the Appropriations Subcommittee for the Florida Judiciary.

7 This license has been placed in inactive status by myself and is eligible for reactivation at any time at my volition. This is so because I remain in good standing with the Illinois Bar.

8 Specifically, a B.A. in secondary mathematics education.