Contractors and construction companies should expect more from an insurance broker than to simply negotiate pricing and terms and conditions with carriers.
This is why it is critical to work with an insurance broker who understands the following critical elements are all part of a successful risk-transfer program.
<CONTRACTUAL RISK TRANSFER
Contractual risk transfer is the least expensive way to transfer and reduce vicarious liability – when a person or entity can be held legally liable for the results of another person’s or entity’s actions – for companies seeking to avoid financial costs resulting from bodily injury or property damage to a third party caused by a subcontractor.
A broker can help reduce exposure by transferring risk to organizations with which a contractual relationship exists.
If your broker can demonstrate to the underwriter how your risk is being transferred contractually, you can benefit from reduced rates and broader coverages.
Owner/municipality contract requirements are becoming more complicated and comprehensive. The insurance program of a general contractor should be negotiated to ensure compliance without asking.
Your broker’s goal should be to decrease the amount of friction associated with this process so you can do what you do best – focus on your business.
<BID AND ACCRUAL SUPPORT
Bid and accrual support assists the insured in pricing products and services. The broker should be prepared to assist the insured in projecting the effect of and changes to the scope of work on insurance costs.
<LOSS-SENSITIVE ADJUSTMENT FORECASTING
This forecasting activity of how a loss-sensitive program changes at various loss levels assists the insured in budgeting costs and cash flows.
Contractors are increasingly assuming more design responsibilities on projects using new delivery methods. While this good news carries with it additional project involvement, new risks to the contractor must be analyzed.
<CONSTRUCTION DEFECT ALLEGATIONS
These types of allegations, which include those involving subcontractors, mold and exterior insulation and finishing systems, must be understood and addressed. Different carriers have different positions on these issues with dramatically different levels of protection.
Your broker must understand and explain where your carrier stands regarding these issues before an insurable event occurs. Then necessary adjustments can be made.
<WORKERS’ COMPENSATION EXPOSURES
Workers’ compensation insurance provides for medical care and rehabilitation costs for injured workers, as well as lost wages and death benefits for the dependents of persons killed in work-related accidents.
These exposures need to be analyzed in detail to identify root causes of loss and uncover new practices and programs to avoid future injuries.
<MOBILE EQUIPMENT AND INSTALLATION FLOATER
These insurance programs need to be designed to meet the needs of each insured’s own operations.
<OWNERS AND CONTRACTORS PROTECTIVE LIABILITY, RAILROAD PROTECTIVE
AND BUILDERS RISK
These quotes need to be turned around quickly so the insured can include accurate costs and coverages in bids.
<SAFETY AND LOSS CONTROL
Is your broker assisting with your safety challenges? Does your broker understand the myriad challenges surrounding the safety of your employees and customers?
Your broker should work with you to include safety in your service plan in order to improve loss mitigation programs and promote safety culture across the organization.
Your broker must ensure your claims are handled with a sound resolution strategy to meet goals and objectives. He or she should understand and overcome the communication challenges associated with claims.
The claims process is where “the rubber meets the road” when transferring risk to insurance products.
<BETTER COLLABORATION AND ACCESS
TO IMPROVE TOTAL CONTROL
You should be able to prepare your own certificates of insurance for your bids/customers on a 24/7 basis anywhere in the world, while also being able to access your insurance information at any time.
<MIDTERM STEWARDSHIP REPORTS
Your risk management outsourcing partner – your broker – should at a minimum commit to issuing midterm stewardship reports to demonstrate it is focusing on areas important to you – the insured – and to ensure if there is a midpolicy-year correction, it can be made efficiently.
Kevin McPoyle of Doylestown is president and co-founder of KMRD Partners Inc., a risk and human capital management consulting and insurance brokerage firm based in Warrington and with two other offices in southeastern Pennsylvania. He can be reached at 267-482-8331 or firstname.lastname@example.org.