subscribe to ENR magazine subscribe
contact us
advertise
careers industry jobs
events events
FAQ
Mcgraw Hill Construction
ENR Logo
SUBSCRIBE TODAY
& receive immediate web access
comment

Contractor Insurance Issues Touched by Laws, Recession

Text size: A A
----- Advertising -----

The recession is killing off many smaller construction firms, and surety losses are growing. But bigger, better-managed companies continue to win jobs. Further, overall, the surety losses will be manageable.

Speaking at the International Risk Management Institute's construction conference in San Diego, Richard Resnick, senior vice president of Aon Construction Services Group, noted that the number of new contractor-controlled wrap-up insurance programs has pulled even with those of new, owner-controlled programs.

Bid credits are the amount saved when a contractor removes the cost of insurance from its bid. "If you look at the number of CCIPs 15 years ago, they might have been 5% to 8%" of the wrap-up total, Resnick said. "Now it's probably closer to 50-50 when it comes from OCIPs vs. CCIPS."

Contractors with rolling CCIP programs and many staffers devoted to risk and insurance may get more attractive rates and "can do a better deal" than an owner, said Anthony Rastall, partner in JLT Specialty Ltd., a London-based broker. Two other reasons why contractor control may be better are that the contractor will do a better job at safety and claims management, and the owner is a legal and contractual step removed from the subcontractors performing the work.

Yet owners may prefer to control the wrap-up program because their lenders prefer that arrangement. Under a wrap-up, the owner also will have control of payments for claims—something that may make a contractor queasy. Some big contractors will insist on controlling the risk and insurance, said Rastall.

Speakers also noted legal wrangling over scope of coverage of construction defects under contractor liability insurance in Hawaii, South Carolina, Colorado and Arkansas, where contractors convinced lawmakers to pass new statutes defining an occurrence or trying to clarify the issue. As a result, a few insurers reportedly are steering clear of writing liability coverage for contractors in those states. Those firms regularly default on work in progress or shut their doors.

Keywords:

----- Advertising -----
  Blogs: ENR Staff   Blogs: Other Voices  
Critical Path: ENR's editors and bloggers deliver their insights, opinions, cool-headed analysis and hot-headed rantings
Project Leads/Pulse

Gives readers a glimpse of who is planning and constructing some of the largest projects throughout the U.S. Much information for pulse is derived from McGraw-Hill Construction Dodge.

For more information on a project in Pulse that has a DR#, or for general information on Dodge products and services, please visit our Website at www.dodge.construction.com.

Information is provided on construction projects in following stages in each issue of ENR: Planning, Contracts/Bids/Proposals and Bid/Proposal Dates.

View all Project Leads/Pulse »

 Reader Comments:

Sign in to Comment

To write a comment about this story, please sign in. If this is your first time commenting on this site, you will be required to fill out a brief registration form. Your public username will be the beginning of the email address that you enter into the form (everything before the @ symbol). Other than that, none of the information that you enter will be publically displayed.

We welcome comments from all points of view. Off-topic or abusive comments, however, will be removed at the editors’ discretion.