IRMI Update—Issue #106
An E-mail Newsletter for Risk and Insurance Professionals
ISSN: 1530-7948
February 8, 2005
In This Issue
Colleague,
George Head is not only a risk management guru, but a friend as well, and
I am very excited to announce his new affiliation with IRMI. In a new service
especially designed for IRMI Update subscribers, George will provide personalized
advice on risk management issues in a unique question-and-answer format. Appropriately
called "Ask George Head,"
this no-cost service will give you access to George's knowledge, resources,
and many personal contracts developed in working with the Associate in Risk
Management (ARM) designation.
All you have to do to seek George's advice and counsel is to fill out the form.
An e-mail will be sent to George, and he will personally respond to your
inquiry. Periodically we will publish the questions and answers on IRMI.com,
without names or particulars, so your anonymity is assured. George has also
agreed to become an IRMI.com expert commentator on risk management ethics. With
the current focus on Eliot Spitzer's accusations and legal actions, this is
a topic that begs for attention from a well-respected risk management guru like
George. His first article can be found in the Risk Management—Ethics subweb.
I sincerely hope you will try "Ask
George Head" and recommend it to your friends and colleagues. Thank you
again for subscribing to IRMI Update.
All the best,
Jack
Jack P. Gibson
President
IRMI
Assure That Wrap-up Program Limits Are Adequate—Many,
if not most, general liability insurers are no longer providing Contractors
"Excess of Wrap-Up Coverage." Thus, contractors are finding that the only coverage
they have on a wrap-up or owner-controlled insurance program (OCIP) is the wrap-up
itself. They can no longer rely on their own insurers if there should be a problem
with a wrap-up's limits.
Contractors and their brokers should therefore ask for and review the limits
of each wrap-up in which they are enrolled. In this day of large verdicts, the
potential does exist for limits to be exhausted. Also, a wrap-up is typically
in effect for multiple years, and insurers can encounter financial problems
in the future.
Are the wrap-up's limits annual or for the project duration? As there are
more and more "rolling wrap-ups" that becomes even more important. Under a rolling
wrap-up is the limit on each project or for the numerous projects covered under
the rolling wrap-up? Do you think the limits are adequate for a project (or
projects) of this size, duration, and risk levels? If you are a subcontractor,
you might even consider trying to opt out of enrollment in the wrap-up.
Additionally, during the project, and even when the project is over and claims
are still being paid and administered, the enrolled contractor should regularly
(quarterly) review the total paid and total incurred.
As contractors can no longer rely on its own insurance program to "be there"
if a wrap-up should exhaust its limits or the wrap-up insurer financially fail,
they and their insurance representatives should look at the wrap-up as closely
as they do their own insurance program.
Conversely, sponsors of wrap-up programs need to be cognizant of these issues
when planning their programs. By providing adequate limits and an adequate duration
for the completed operations coverage, they can reduce resistance to their programs
and better protect all parties.
By: Frank Keres
Construction Risk Associates, Inc.
Brookfield, WI
Frank.Keres@constructionriskassociates.com
Suggest a Risk Tip. Send us a practical tip (less than 300 words) for identifying and managing risks,
buying insurance, managing claims, or filling gaps in insurance coverages. Submit your tips. We'll
acknowledge your contribution as we did for Frank.
There are now 628 risk management and insurance articles on IRMI.com. Below
you'll find summaries of some recent additions with links to the articles.
-
Why Link Risk Management
and Ethics? —Risk management guru Dr. George Head joins IRMI's
group of expert commentators on the topic of risk management ethics, and
in this article, explains the importance of both.
-
Fourth Quarter Survey
Shows Significant Softening in Commercial P/C Market —The Council
of Insurance Agents & Brokers survey shows a continuing significant decline
in premiums, with most large and medium accounts showing a 7-10 percent
drop in premium.
-
Court Reporting/Deposition
Services: What You Should Know —In this quarter's Litigation
Management column, Michael Boutot takes a look at the role of court reporters,
their history, types, qualifications, functions, and cost factors.
-
"What Performance
Did the Parties Bargain For?"—In California, wrongfully terminated
contractors will likely not be able to recover from owners their future
lost profits resulting from their inability to obtain bonds. Marilyn Klinger
explains.
-
Dealing with Ambiguities
in Design-Build Contracts—Mike Loulakis discusses recent case
law supporting the view that an owner retains liability to the design-builder
when it provides faulty or ambiguous information to bidders.
We have recently updated IRMI Online to include the latest issues of our
newsletters, The Risk Report, Captive Insurance Company Reports, and Strategic RM, as well as supplements to
a number of the reference manuals. See a summary of all the new stuff with direct links into the publications.
Mark your calendars for the 25th IRMI Construction Risk Conference to be
held November 7–10, 2005, in Las Vegas. If you have a topic you'd like to see,
are or know of a good speaker, or otherwise want to provide input on this year's
Conference, send us your suggestions by February 15. For more information, see
the speaker information
section of the Conference subweb.
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