2008 ACI-NA Insurance & Risk Management Conference. Chet Mitrani, Exec. VP. January 17, 2008

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1 2008 ACI-NA Insurance & Risk Management Conference Presented By: Chet Mitrani, Exec. VP January 17, 2008 Ft. Lauderdale, FL

Managing Construction Risk Wrap-Ups-A risk management tool useful in reducing the cost of risk and increasing coverage control Owner Controlled Insurance Program (OCIP)

2 Managing Construction Risk Wrap-Ups-A risk management tool useful in reducing the cost of risk and increasing coverage control Owner Controlled Insurance Program (OCIP) Contractor Controlled Insurance Program Hybrid Partnered Programs Program Variations Single Project Rolling Program Maintenance NO CIPS Traditional Insurance Requirements

3 OCIPS Insurers CGL/Excess Workers Comp Employer s Liability Owner General Contractor Subcontractors General Contractor Subcontractors General Contractor Subcontractors

4 CCIPS Insurers CGL/Excess Workers Comp Employer s Liability General Contractor Subcontractors General Contractor Subcontractors General Contractor Subcontractors Owner is AI

5 Workers Comp NO CIPS Owner CGL Employers Liability Construction Manager/General Contractor Workers Comp CGL Owner is AI Employers Liability Workers Comp Subcontractor CGL Owner is AI GC IS AI Employers Liability

6 OCIP vs CCIP vs NO CIPS OCIP CCIP NO CIP Program Benefit Summary Reduced Cost of Risk (SAVINGS)???? Consistent & Higher Limits Dedicated Project Greatest Control over Project Centralized Safety Centralized Claims Services Improved M/WBE Participation Program Benefit Summary Reduced Cost of Risk (PROFIT) Consistent & Higher Limits Better Control over Project Centralized Safety Centralized Claims Services Improved M/WBE Participation Program Benefit Summary Contractual Risk Transfer

7 Commercial Wrap-Ups (U.S. Opportunities) Best - $200M Possible - $250M Difficult - $350M Monopolistic

8 Marketplace Changes Over Time COST COST Contractor Provided Cost Contractor Provided Cost SAVINGS SAVINGS Minimum CIP Cost CIP COST INCLUDING RETAINED LOSSES Minimum CIP Cost CIP COST INCLUDING RETAINED LOSSES LOSSES OVER TIME LOSSES OVER TIME

9 Named Insured vs. Additional Insured Named Insured is: Person/organization shown on the Declarations page Benefits of being a Named Insured: applied to you You must be notified of cancellation Obligations of a Named Insured Must notify insurer of claims Must keep records for premium computation Financially responsible for payment of premiums Must cooperate in investigation and defense Must transfer subrogation rights (insurer can waive)

10 Named Insured vs. Additional Insured Additional Insured is: Person/organization defined as insureds in the policy, or added by endorsement, such as: Employees Executive Officers Designated Person/Organization scheduled in the policy Benefits of being an Additional Insured: applied to you. However, generally will be restricted to the actions of named insured (contractor) Obligations of a Named Insured Must cooperate in investigation and defense Must transfer subrogation rights (can be waived by insurer)

11 General Provisions - Additional Insured Status Such certificate shall evidence that the owner has been named as an Additional Insured on all CGL, Automobile and Umbrella policies. Provides owner with insurance protection under the other party s insurance policies Allows owner to present a claim directly to the other party s insurer Protect owner from adverse loss experience If the indemnity does not apply or is ruled invalid, the Additional Insured status may cover defense and damages.

12 Flow Down Clause A flow down clause is a must for contractors A flow down clause contractually binds the subcontractor to the general contractor in the same manner as the general contractor is bound to the owner

13 Elements of a Successful Project Communication Broad s Administration Safety/Loss Control Emphasis Claims Management

Wrap-Up Coverage for the Claims Professional

Wrap-Up Coverage for the Claims Professional by Tracy Alan Saxe Edwin L. Doernberger Jeremiah M. Welch April 6, 2010 Objectives Understand ideal coverage under wrap-ups Understand difference in coverage