Construction projects can benefit from different types of controlled insurance programs: an Owner Controlled Insurance Program (OCIP) or a Contractor Controlled Insurance Program (CCIP). While a general contractor sponsors a CCIP, a construction project owner is responsible for sponsoring an OCIP.
When determining which program is best for your project, here are some of the benefits and challenges you should be aware of.
With an OCIP, the Owner and participants of the construction project can see benefits from the following key areas:
An OCIP has collateral requirements, which can include 100% prepayment for any premiums and expected losses, a letter of credit, or cash collateral. The Owner should consider each as respect to overall cash flow.
The Owner must also decide on the administration of the OCIP, as there can be a paperwork burden involved.
In addition, an Owner must be engaged in the claims management process even after a project is completed, which can extend between five to ten additional years. Any savings and losses cannot be determined until all of the claims have settled, which can take up to ten years.
Some overall benefits for a CCIP include:
More pressure is placed on the General Contractor, since they hold full responsibility for assisting with administration, and they control who enrolls in the program. The General Contractor also retains financial risk for the project, which means the success of the program lies heavily in their hands.
TSIB provides both OCIP and CCIP programs and administrative services, and has years of experience with construction projects and insurance. We understand controlled insurance programs, contractor liability insurance, and general construction insurance policies. Our experienced construction personnel hold managing positions in the firm.
If you are looking for additional insights for a Wrap-Up, visit our Wrap Administration webpage to learn how TSIB partners with other Brokers to deliver Wrap administrative functions.
For more information on choosing the right program for your next project, you may download our Wrap-Up CCIP vs. OCIP eBook!
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