Alliance of Schools for Cooperative Insurance Programs

Transcription

1 Alliance of Schools for Cooperative Insurance Programs PASADENA UNIFIED SCHOOL DISTRICT Owner Controlled Insurance Program (OCIP) Overview and Proposal Presentation SEPTEMBER 30, 2009 Alliance of Schools for Cooperative Insurance Program Bloomfield Avenue, Cerritos, California Phone (562) Fax (562)

2 Today s s Agenda Overview of ASCIP s Owner-Controlled Insurance Program for School Construction What is the traditional approach to insurance and safety in school construction? How does an Owner Controlled Insurance Program (OCIP) differ from traditional insurance and safety programs for school construction? How does ASCIP s OCIP partnership uniquely support the school district, its community, and save money? GC minimize the expenditure of public funds on the project in conjunction with the exercise of appropriate risk management. 2

3 ASCIP OCIP Program Highlights Largest Rolling Scholastic OCIP in California Approximately $2 Billion in Total Active/ Completed Project Values 26 Member Districts Participating 9% Loss Ratio as of December

4 Alliance of School for Cooperative Insurance Programs Formed in 1980, ASCIP is a public agency joint powers authority (JPA) Provides risk sharing pools to 154 California public school districts, community colleges, charter schools and subsidiary JPAs Not for profit Formed OCIP in 2000 to offer JPA members a quality, cost effective alternative for construction projects 4

5 ASCIP OCIP Loss Ratio Compare to 65% 70% 60% 50% 40% 30% 20% 10% 0% Traditional Contractor Program ASCIP OCIP I (Zurich) ASCIP OCIP III (Liberty Mutual) Loss Ratio 65% 22% 9% 5

6 Traditional Insurance Program Contractors/Subs all have own insurance carriers District/CM manage insurance and safety compliance while supervising construction efforts District/CM is responsible: Manage insurance documents for contract compliance for all parties Verifying insurance/certificates/endorsements Track coverage certificates/endorsements at renewal Providing oversight of safety plan compliance and implementation Ultimate responsibility for accidents and injuries (deep pocket) Typical Challenges: Insurance not in compliance with contract and/or lapse at renewal Safety may be sidelined when time/cost pressures occur Finger pointing by various insurance carriers with loss occurs 6

7 OCIP Concept Single insurance program - one major carrier OCIP covers the entire construction project including district (owner), contractors, and all subs OCIP Administrator responsibilities: Enroll all contractors/sub-contractors for coverage Verify insurance/certificates/endorsements Ensure safety compliance with contractors Provide safety training and incentives Manage all claims and litigation arising from the project 7

8 OCIP Benefits Completes Projects Safely and On Time Provides Broad Coverage and Deductible Limits Offers access to WeTip, a safe means to report crime information for cash reward Provides insurance fraud prevention through verification of enrolled subcontractors certificates of insurance Encourages Small and Local Business Participation Supports Project Labor Compliance Efforts Reduces the Potential for Cross-Litigation Cost Savings 8

9 Broad Coverage & Dedicated Limits LIMITS LIMITS PER PER PROJECT Workers Compensation/ Statutory/$26 Million Employer s Liability General Liability $29 $29 million Ten Ten (10) (10) year year completed operations Crisis Intervention Coverage $250,000 Builders Risk Risk Optional* *As *As an an ASCIP ASCIP member, member, the the district district currently currently has has $50MM $50MM in in Builder s Builder s Risk Risk coverage coverage per per occurrence occurrence at at no no additional additional costs. costs. Optional Optional Excess Excess builder s builder s Risk Risk coverage coverage should should be be considered considered for for those those projects projects greater greater than than $50MM $50MM in in value. value. 9

10 Maintenance Deductibles General Contractor We recommend the district consider the use of a minimum maintenance deductible ($5,000- $25,000) per occurrence because it will ensure that contractors will take affirmative responsibility for securing property at construction site and can help fully or partially offset the district s Builders Risk coverage deductible by the general contractor s maintenance deductible. (No Deductible applies to Builders Risk Coverage) Multi-Prime Special consideration should be made when determining maintenance deductibles on multiprime projects so that overlapping and duplicative costs are not incurred by the district. 10

11 Coverage Excluded Automobile Liability & Automobile Physical Damage Contractor s Equipment Hazardous Abatement Earthquake Flood Blasting Crane Ball Operated Demolition Demolition over 25% of Project Value Surety Insurance (Bonding for Contractors precluded by GC 4420 in an OCIP) **Note Districts do not generally have Earthquake or Flood on any other buildings. 11

12 OCIP Supports Small & Local Business Avoid costs of of minimum insurance premium obligations Enhance insurance coverage/limits and and terms/conditions Provide safety support and and expertise Coordinate and and advocate claims handling activities with with carrier and and legal counsel 12

13 OCIP Support Project Labor Compliance Efforts Consulting services to to review Project Labor Compliance plan plan and and implementation Providing consolidated payroll data to to the the Labor Compliance Officer as as a secondary confirmation of of overall payroll incurred Cross-referencing of of construction employees confirmed on on school jobsite 13

14 Cost Savings Example Modernization/New Construction Project Hard Hard Construction Construction Costs: Costs: $ 25,000,000 25,000,000 Project Project Duration: Duration: TBD TBD OCIP OCIP Premium: Premium: $700,000 $700,000 (2.8% (2.8% of of Hard Hard Cost) Cost) Actual Actual Contractor Contractor $1,025,000 $1,025,000 Insurance Insurance Cost: Cost: (4.1% (4.1% of of Hard Hard Cost) Cost) Savings Savings $325,000 $325,000 Final Premium is based on Final Hard Costs including change orders. 14

15 Broker Compensation The OCIP Rate is equal to 2.8% of the Project Hard Construction Value and the rate includes the following sub-percentage compensation: Arthur J. Gallagher & Co. Insurance Brokers of California, Inc. receives.4% of the Hard Construction Value as a fee for their role as ASCIP s OCIP Program Administrator, which includes program administration, brokerage, safety and loss control, and claims management services/oversight. 15

16 Are Cost Savings Real? Evaluating Costs Through the Bidding Process Prepare construction bid language to include bidding net of insurance costs Award bid to winning contractor Winning contractor to provide insurance costs to construction project for all contractors/subcontractors for comparison to OCIP cost. The general contractor or prime contractor will be required to submit their declaration pages for Workers Compensation and General Liability Construction project to proceed with or without OCIP program at District s discretion 16

17 Safety & Loss Prevention A Master Safety Plan can be adopted and used by all contractors throughout the project Planning a safe project in the earliest phases insures that safety shall be viewed as part of the job OSHA 10-Hour Outreach Classes offered to contractors for free Safety inspections and consulting support by OCIP administrative team and insurance carrier Loss control included 17

18 Safety & Loss Prevention Loss control consultants are assigned to the project based on project size. Loss control manager provides incentives for safety i.e. free lunch, prizes, Z87.1 Safety Glasses. 100 Work Days With No Medical Claims Lunch is on Us! PIZZA! 18

19 Gallagher OCIP Materials 19

20 Program Safety Requirements Drug Program Initial Hire and Post-Accident 6 Fall Protection, harnesses and lanyards required if other protective means are not used OSHA Serious Violations No more than 5 serious violations within 5 years with no more than 2 serious repeats in 5 years OSHA Willful Violations NONE Hardhats & Safety Glasses are required at all times & other Personal Protective Equipment (PPE) required by work being conducted 20

21 Program Safety Recommendations Experience Modifier 1.25 composite project average measured over a 5 year history. Any paper contractors participating on a project should participate and pass the 10-hour OSHA Construction Safety training course. 21

22 Claims Management Claims management and oversight provided by the OCIP Administrator Comprehensive registration methods to ensure workers on our District s site are covered Clinics, claim forms and processes are approved prior to the start of construction Workers compensation and liability claims are handled by ONE insurer, thereby eliminating the finger pointing among insurers that takes place on a traditional project (reduces stoppages) 22

23 Administration CipWorks is a web based tool that will help you track the success of your OCIP and ease the expense and time associated with administration of a OCIP. It is real time, 24/7 and available from anywhere. CipWorks won A.M. Best s first E-Fusion Award for internet based programs for managing construction OCIP S. For the administrator and the General Contractor, CipWorks provides up-to-the minute details of: Contractor enrollment documents Automated follow-up for missing documents Off-Site Certificate compliance 23

24 JOB OVERVIEW PAGE CIPWORKS CIPWORKS allows allows the the OCIP OCIP team team members members to to easily easily stay stay in in touch. touch. Click Click on on a team team member member name name and and send send them them an an from from your your own own system. system. 24

25 ASCIP/Gallagher Wrap Up Expertise Construction Industry Experience Over 6,000 contractor clients in California 50 Active Wrap Up programs nationally School Construction Experience 147 projects Scholastic Experience ASCIP 170 members plus Innovative Ideas Safety Tool Box Kit Hard Hat Sticker Program State of the Art RMIS CipWorks Strong Carrier Relationships Commitment to Partnering Minority Business Enterprises & Women Owned Businesses 25

26 Ensuring OCIP Partnership Success Outstanding support from the Board of Trustees and other oversight committees Clear communication, understanding and commitment of the entire construction team including district personnel, consultants and contractors Involvement of the ASCIP/Gallagher OCIP Team early in the planning process Project safety and timely completion must be the primary goal and focus 26

27 References Construction Managers Business Officials Facilities Directors Tomas P. Lynch, Project Executive Seville Construction Services, Inc. (714) Bill Sylvia, Director Los Rios CCD (916) Matt Covella Palos Verdes Peninsula USD (310) Jaime Pace McCarthy (949) Pearl Iizuka Palos Verdes Peninsula USD (310) Buck Weinfurther Downey Unified School District (562) Atta H. Alsaleh, CCM CEO APM, Inc. (909) Michael Bishop, Asst. Superintendent Business Services - Paramount USD (562) Darryl A. Odum, Director Rancho Santiago CCD (714) Tom Lavia, Senior Project Manager Douglas E. Barnhart (562) Kris Olafsson, Dpty. Superintendent Business Services El Monte CSD (626) Gus Gonzales, Rio Hondo CCD (562) John M. Didion, Exec. Vice Chancellor Rancho Santiago CCD (714)

28 APPENDIX California Government Code Section