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GENERAL LIABILITY ROUND-UP

Beverly Hill, Balfour Beatty Construction Janet Kerr, Boston Properties David DeLaRue, Willis Construction September 16, 2014. GENERAL LIABILITY ROUND-UP. Locating the herd?. Conventional. Owner CIP 1940 to Present. Contractor CIP 1998 to Present.

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GENERAL LIABILITY ROUND-UP

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  1. Beverly Hill, Balfour Beatty Construction Janet Kerr, Boston Properties David DeLaRue, Willis Construction September 16, 2014 GENERAL LIABILITY ROUND-UP

  2. Locating the herd? Conventional Owner CIP 1940 to Present Contractor CIP 1998 to Present Owners begin looking at using CIPs for Residential Risk Standard market begins restricting coverage for home builders Residential Market Slows. E&S looks to commercial market OCIP introduced to construction Residential GL only Expands as construction explodes Owners begin to consider GL Only CIPs on larger commercial projects. 1998 1940 2000 2008 2010 2012 to Present 1995 Contractors hate the CIP and anyone who supports them. Excess & Surplus Lines senses an opportunity and begins writing Residential GL Only CIPs Contractors begin using WC/GL CIPs Workers compensation rates begin to soften putting pressure on WC/GL CIPs Contractor CIPs gain momentum and owners see more CCIP offerings Rolling GL Only CIPs appear and contractors are using CCIPs more on projects of all sizes. GL Only on commercial projects becomes more competitive

  3. Diverging & Converging Interests • General Contractor • Contractor Risk – Contractor Coverage • Practice Policy Integration • Subcontractor Exposure • Owner relationship • Owner CIP limitations • Coverage • Condo Conversion • Owner • Contingent or vicarious liability (Named insured?) • Lender requirements • General contractor relationship • CCIP Transparency • Coverage • Cost management • Claim Defense • Improved Coverage • Successful Project

  4. WC/GL vs. GL Only – Decision Drivers WC/GL CIP GL Only CIP • Admitted Carriers • Deductible • Minimum Retention usually begins at $250K • Collateral requirements • Better control over workers’ compensation (WC) claims. • Reduces exposure for WC subrogation • Carrier safety resources • Standard ISO forms with wrap-up modifications • Reliance on broker administrator – Carriers will consider broker experience in underwriting • Limited appetite for residential risk • Project size limitations • Multiple ownership interests complicates the placement • Excess & Surplus (E&S) Lines • Deductible or Self-Insured Retention* • Low retention - $25K • No collateral requirements • No control of workers’ compensation claims except through agreement • WC subrogation exposure • No safety services • Coverage form flexibility • Can mandate use of third party program administration in addition to broker • Market is open to residential risk • Greater flexibility on project size • Good solution for JVs or multiple ownership interests

  5. GL Only Market Summary

  6. GL Market Summary

  7. Industry Trend to GL Only? • Workers compensation rates continue to pressure WC/GL OCIP financials • Retail underwriters have limited interest but that may change • Continued erosion of contractual protections will drive many to project insurance • Continued erosion of subcontractor • Lenders are becoming more aware and drive projects into a CIP • Project delivery methods will rely on more CIP solutions (IPD & P3) • Owners will continue to explore GL only • Contractors continue to rely heavily on WC/GL CIP but use GL only on select projects

  8. Recent GL Only Project Examples Cameron LNG Plant - $5Bn LNG Project in Louisiana DeKalb County – Rolling OCIP Minnesota Vikings - $750M Stadium Project MGM National Harbor Hotel & Casino - $800M Hotel Casino

  9. Questions & Answers

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