VALUE-ADDED SERVICES KEY TO SERVING CONSTRUCTION BUSINESS

Specialists extend by maintaining dialogue with contractors and total management of risk

Contractors have take pleasure ined explosive growth in many of the major geographic markets through every part of the United States, in one as well as the other commercial and residential arenas. At the same time, a certain quantity of insurance issues are changing the way that contractors-and the agencies that obey them-are doing business.

Construction returns parameters are tightening, some coverages have been eliminated or redrawn and it gazes as though pricing is beginning to make tender at least in some markets. In addition, in many markets insurers are emphasizing financial underwriting, which dictates the horizontal of program based on contractor asset health. In many cases, this revised focus calls for higher retentions and better contractor financial/loss management than at any time before.

As a result of all these changes and others, agencies that proffer valueadded risk management services, education for the contractor, assistance with employee practices, and other specialized services are prospering in this market.

Paul Coffey president of EJ Wells Insurance Agency in Westford, Massachusetts, says that renewal premiums are averaging 15% to 20% les than last year because insurers are finally backing not on the high reserves mandated by dint of 9/11 and capacity is flowing back into the marketplace. Luckily, Coffey says, his agency doesn't barter on price, but offers value-added services to hand-picked commercial contractors and subcontractors in the Boston, fresh Hampshire and Rhode Island marketplace.

The importance of value-added

The EJ Wells agency has about $12 million in premium, seven fulltime employee and sum of two units part-timers. The agency serves alone contractors, confined to privately possessed relatively large companies (the largest has $100 million in revenue) that include several general contractors as well as specialty subcontractors.

"We are specialists and that gives us validity in the marketplace among insurers and among contractors. We provide a written service agreement to each of our clients and a service package that includes of the like kind things as an annual review of workers compensation experience rating, los sway and risk transfer strategies," says Coffey

Frank H Furman Insurance, Inc. in Pompano Beach, Florida, provides human resources consulting as single of many value-added services for its contractor clients. An agency staffer assists clients with wage and hour issues and helps disentangle companyspecific procedures, an employee benefit handbook and anti-sexual harassment policies.

"We have place that less than 15% of typical construction professionals have dedicated HR departments," says fleece Foote, executive vice president. "We establish a separate pay agreement with the contractor based upon the scope of work and the specific human resource services provided. This allows the contractor to reach on the outside to us as their advisor instead of turning to a labor law attorney." Foote says the agency has a relationship with sum of two units local employment law firms, which handle legal matters end the Furman Agency on behalf of its clients.

This $80 million premium agency has sum of two units offices (in south and central Florida) and 55 employee More than 70% of the agency's volume is construction accounts and a great deal of of that is in high-hazard professions similar as roofing contractors.

Risk management is king

The construction specialists we spoke to obtain intimately involved in their clients' contract proces particularly related to risk avoidance and los management. This is extremely important because of changing and more restrictive provisions beneath general liability and umbrella policies. For example, ISO forms that were revised in mid-2004 are greatly restricting the purpose of additional insured endorsements, of that kind as those for bodily injury and characteristic damage once work on a shoot forward is completed. In addition, many carriers are reducing coverage aim such as excluding defense inside the limits of liability.

One way contractors are reacting is to increase deductibles. "To avoid take away froms from going sky high, contractors are substantially increasing their deductibles," says Foote "A mid-size trade contractor may have a $100000 deductible for general liability. Overall, we think this is a useful thing, since it causes contractor management to exercise higher standards of care than at any time before."

He says the Furman agency, which specializes in higher hazard construction risks, provides a contract review to help clients avoid liabilities that fall outside their coverage mark The agency also provides its general contractor clients with a subcontractor requirement checklist to identify when any subcontractor is without of compliance. "We want to make certain that liability streams downstream to second-and third-tier subcontractors," says Foote A special database tracks all of a client's subcontractors and flags any that have a cancellation of workers compensation pending for nonpayment of premium or other reasons.

If there is a inexorable injury or death, the agency dispatches its inhouse safety professionals to perform a comprehensive interview with the foreman, ship's company chiefs and any witnesses from the jobsite. The agency also attends informal and formal conversations with OSHA as a contractor's advisor and consultant. "We have feeling that our participation at this high horizontal further illustrates our partnership with our construction clients," says Foote