Wrap 101

What is a Controlled Insurance Program?

• As defined by International Risk Management Institute (IRMI);

http://www.irmi.com/

“A Wrap Up or a controlled/ consolidated insurance program is a centrally procured and managed insurance and risk control program implemented for a construction project or a series of projects.”

• It is a Shared Risk Management Program

Why Should A Wrap Up be Considered?

• Always Consider the 3 C’s
  • Coverage
  • Control
  • Cost Savings

• Coverage
  • Wrap Up programs can;
    • Provide a Broader Scope of Coverage when compared to traditional insurance methods
    • Ensure Dedicated & Adequate Limits for the Project
    • Facilitate and Support Minority / Women Business Enterprise (MBE/WBE) Participation
    • Provide Dedicated and Focused Insurance Protection for all Enrolled Participants
• Control
  • Wrap Up programs can offer;
    • Completed Operations Coverage thru Statute of Repose
    • Reduction in Litigation, “No Finger Pointing”, One Insurance Carrier
    • Assurance in the Quality & Stability of Insurance Carriers
    • One Risk Management System including Loss Control & Claims Management
    • Enhanced Protection of the program Sponsor’s Assets
• Cost Savings
  • Wrap Up programs should provide;
    • Economies of Scale in the purchase of project specific insurance
    • Elimination of the Duplication and Gaps in insurance coverage
    • Financial Savings as a Result of a Favorable Loss Experience

  A typical range of savings can be .25 to 1.5% of the Project’s Hard Costs
  

Wrap Up Program Coverages

Traditional Wrap Up (WC & GL)

1. Workers’ Compensation
2. General Liability                              
3. Excess Liability

General Liability Only Wrap Up 
(Most often provided for Residential construction exposures)

1. General Liability                              
2. Excess Liability

Excluded Wrap Up Coverages

1. Automobile Liability
2. Contractor’s Equipment      
3. A&E’s Professional Negligence

Other Construction Insurance Coverages to Consider

1. Builders’ Risk
2. A&E Professional Liability
3. Contractors Pollution
4. Pollution Legal Liability
5. Surety / Subcontractor Default Insurance

The Wrap Up Does NOT Provide Coverage to Everyone at a Project Site

Typical “excluded parties are;

1. Vendors, Suppliers & Delivery Personnel
2. Fabrication Performed Away from the Project Site
3. Design Professionals (Architects & Engineers) E & O
4. Pollution, Abatement or Asbestos work
5. At Sponsor’s Discretion, Smaller Contracts

            (e.g. $10,000 or less)

Two Types of Wrap Up Programs:

Traditional Wrap Ups (WC & GL)

Single Program

1. Construction Values of $100MM + / -

Rolling Program

1. Multiple projects/single site $125 MM + / - over 2-3 yrs
2. Multiple projects/different sites $150 MM + / -
3. Minimum size $20MM + / -

General Liability Only Wrap Ups
(Most often provided for Residential construction exposures)

Programs

1. Construction Values (CV) of $5MM +/-
2. Multiple prospect programs are available
   

A Quality Wrap Up Should Provide the Following Components:

1. Program Design
2. Administration Systems/Processes
3. Loss Control Management
4. Claims Management
5. Communication

The Cornerstone to a Successful Wrap Up is Always Communication

Your Wrap Up Administrator should always help you stay focused on;

• Your original goals in selecting a Wrap Up program
• Who is Covered by the Wrap Up
• The method by which your Wrap Up insurance costs calculated
  • Payroll
  • Construction Values
  • Construction Values + Sales

Once in….How do you get out?