Knowledge Corner

Contractor’s working on a Controlled Insurance Program (CIP or Wrap-Up) jobsite, are often required to enroll in the Wrap-Up program. When a contractor submits enrollment information, essentially, they are applying to the program’s insurance carrier for a policy. The program’s carrier analyzes the contractor’s information and the history of any claims. Then the carrier approves or rejects the enrollment based on the level of risk they are willing to incur by insuring the contractor. If the contractor is approved, the carrier will issue the company an insurance policy.

The insurance carrier decides if a contractor qualifies for a Wrap-Up policy based on the rules of the program set up at its inception and based on the carrier’s internal rules for determining the risk of insuring a company. This approval process is the reason why the online enrollment form is an “Application for Enrollment” – the carrier reserves the right to reject the enrollment of any contractor based on their and the program’s criteria.

If the carrier rejects an enrollment, the company is excluded from the program. The company does not receive a policy and will rely on its own insurance to cover any claims that occur if the GC or owner allows them to work onsite.

Consequently, every piece of data required for the enrollment application is important. Each data point is required specifically by the carrier and helps them determine if they will insure the company or not. The following are the common pieces of information required and a brief explanation of each:

• Contractor Name, FEIN, and Company Address
  This basic information identifies the company applying. The FEIN is especially important since it is a unique identifier for each company, and it is possible for multiple companies to have a similar name.

• Contract Value
  The amount of money paid to the company to perform the work required for the project. It is also a way to show how much work a contractor will do on the Wrap-Up. Furthermore, it shows how much risk is associated with their presence onsite. A contractor with a small contract value represents less risk than a contractor with a higher contract value since the latter will most likely be working more. 

• Estimated Number of Onsite Hours and Payroll Amount
  Another measure of how much work the company will do onsite which translates to a certain amount of risk.

• Workers’ Comp Class Code
  Identifies the exact type of work the company will perform and how much risk is associated with that work, based on the history of all companies using that code. The owner or sponsor of the Wrap-Up determines what types of work will/will not be covered by the program. The carrier pays close attention to the class codes submitted for enrollment and will often confirm or correct class codes that don’t match the project state with the Wrap Administrator.

• Work Description / Scope of Work
  The information the carrier receives from the class codes is not enough to confirm the type of work. This description explains the type of work the company will perform and gives the carrier a more complete and accurate idea of what the company will be doing at the project. The carrier contacts the Wrap Administrator frequently to confirm or clarify work descriptions, since the carrier uses them to either approve a company for enrollment or exclude them.

• Risk ID
  A unique number assigned by the national or state Workers’ Comp bureau to a company (different from their FEIN) after the company has been in business for three years. It’s used to track their history of claims and experience related to their Workers’ Comp policy.

• EMR
  The Experience Modification Rate (EMR) is a number calculated for each company based on their past claims. A higher EMR indicates more claims and a higher risk. Each carrier has a range of acceptable EMRs and some require additional documentation from a company before they enroll them explaining their claims and their plan to improve safety in the future.

• Contractor's Workers’ Comp Policy Number and Details
  Carriers require this information at the request of certain state’s Worker Comp bureaus and state requirements.

• Onsite Start Date
  This date is very important since it tells the carrier when the company will be at the project location and therefore when their Wrap-Up policy should start. If the owner of the Wrap-Up requires the company to be enrolled, the coverage must begin when they first step onto the project site.
  
  Having all this information accessible before starting the enrollment process can make it stress-free. Depending on the owner or sponsor of the program, this will determine the Wrap Administrator and the software system they are using. Each system is a little different but essentially the information above is required for any Wrap-Up. If you are looking to learn more about Wrap-Up Programs and how they affect your company’s corporate insurance, reach out to TSIB for more information.

TSIB’s Risk Consultants are currently servicing the following locations:
East Coast: New York City, NY; Bergen County, NJ; Fairfield County, CT; Philadelphia, PA
Texas: Austin, San Antonio, Houston, Dallas
California: Orange County, Los Angeles County, Riverside County, San Bernardino County, San Diego County

Image credit: Pormezz/shutterstock.com