By Steven Davis
Services from an insurance professional vary widely depending upon the knowledge and capabilities of the agent/broker and the size and complexity of the contracting firm. Some contractors have captive insurance facilities where the insurance broker will arrange for certain accounting functions, while other contractors have much simpler demands, such as the placement of coverages.
The insurance and risk management support to a contractor needs to be grounded in solid knowledge and information about the contracting industry. All insureds need and desire certain service standards; however, the contracting industry is complex and the agent/broker should have extensive knowledge of the industry and the risks and challenges faced by contractors. It is important to review any service standards with one single question in mind. What services are important in reducing the overall cost of risk of the contractor? Simply having the agent provide a laundry list of services without any integration with “what’s important and why” will only have minimal impact on the long-term cost of risk for a contractor. The following list of actions and services can be promoted by almost any insurance professional; however, few understand how to integrate these actions with operational aspects of the contractor. It requires an intense understanding of the effects of decisions and actions on cost. It is the job of the agent/broker to become a source of information for making better decisions.
In either case, general services for the contracting industry should focus on four specific categories:
- Program Administration
- Risk Management Services
- Claims Support
- Safety/Loss Control
PROGRAM ADMINISTRATION
- Alert the contractor of any substantial changes or trends within the insurance industry that would affect the insurance program; this should be included in the Annual Stewardship Report to client
- Maintain and provide updated Schedules of Insurance for client reference
- Continually assess the contractor’s insurers with respect to service capability and responsiveness
- Review policies and financial documents for accuracy, and secure necessary amendments from insurance companies to conform to program parameters
- Periodically market the insurance program to maximize service and cost
- Assist the contractor in premium allocation among divisions or profit centers
- Monitor job classification codes for workers’ compensation—annually
- Review audits, retrospective calculations, deductibles, etc.
- Obtain Builder’s Risk, OCP, and RRP quotations as needed
- Coordinate activities with claims services on statistical loss runs and annual review of losses
- Maintain copies of all policies including a specific listing of expirations
- Supervise premium payments to insurance companies
- Prepare annual Risk Profile & Exposure Analysis and report new exposures/risks
- Perform a risk assessment and coverage review annually
- Prepare insurance specifications for the marketplace
- Prepare loss analysis for retention programs
- Review and critique subcontractor insurance requirements with legal
- Negotiate with insurers on renewal parameters
- Analyze and compare quotes from various insurers
- Review and deliver policies
- Prepare Stewardship report annually
- Coordinate contractor/carrier meetings as needed—annually
- Provide insurance budget estimates
- Estimate experience modification factors annually and resolve discrepancies
- Issue certificates of insurance, binders of insurance, and auto identification cards
- Review equipment and property values for placement of coverages
- Review and track MVRs
RISK MANAGEMENT SERVICES
- Loss analysis and forecasting
- Optimum retention level analysis
- Risk identification and analysis
- Program design, implementing, and monitoring
- Perform annual subcontract document analysis
- Financial analysis of alternative risk management programs
- Feasibility studies of captive insurance companies or self-insurance plans
- Follow-up and monitor LOC, or any other financial instrument
- Develop alternative collateral means to support cash flow plans
- Work with service providers on the risk management information methodology including data transfer and capability of loss reporting by jobsite
- Respond to coverage questions and new exposures
- Evaluate excess limits and the adequacy of such limits
- Conduct client review with internal quality control
CLAIMS SUPPORT
- Act as liaison between the contractor and the insurer/TPA on claim matters
- Ensure that written claim handling procedures, approved by the contractor and insurers, are in place
- Monitor compliance with written procedures, identify incidents of non-compliance and initiate corrective action
- Review coverage issues and, as the contractor’s advocate, negotiate with carriers to achieve satisfactory resolutions
- Conduct periodic claim reviews at selected locations as requested by the contractor and issue timely written reports on results
- Respond immediately to large or unusual losses
- Follow serious claims upon request and obtain periodic status reports from appropriate carrier
- Evaluate pre-settlement reviews and attend settlement conferences
- Screen coverage issues
SAFETY/LOSS CONTROL
- Prepare and conduct instructional seminars
- Review insurance company’s loss control reports
- Frequency/severity by jobsite analysis
- Frequency/severity by type of accident analysis
- Frequency/severity by exposures (man hours, payroll, or sales) analysis
- Break even chart (retro vs. guarantee cost)
- Loss control training as needed, i.e., OSHA 10-hour course
- Resource for contractor’s safety director
- Accident investigation assistance
- Periodic site evaluations
- Operation and pre-job assessments
- Performance benchmarking information
- Develop strategic response and disaster planning
CLOSING THOUGHT
While listing of specific duties may not be exhaustive, it should serve as a starting point in establishing the special services desired by a given contractor.
About the author
Steven Davis is director and senior vice president at McGriff, Seibels & Williams, Inc., one of the most progressive insurance brokerage firms in the United States. For more, visit www.mcgriff.com.
Modern Contractor Solutions, October 2019
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