Knowledge Corner

Once you’ve properly defined the risk being considered for a Wrap-Up, you’ll work with your broker to develop a marketing submission that will be distributed to the carrier’s underwriting team. The marketing submission tells the “story” of the project and ultimately determines if the carriers will accept the project and provide a quote.

The Wrap-Up broker creates the submission but will rely on the insured to provide quality information to include within it. It’s important to send a completed submission to the carrier.  Part of their decision to quote or reject the project come from their first impression of the submitted documents. Ensuring you have all the data for the submission is extremely important. 

The carriers that insure Wrap-Ups in the marketplace tend to have their own nuances on what they want to see and require in the submission. Here is a list of items that should be included in your submission. 

1. Project Lists and Descriptions
   Project lists and detailed descriptions of your project(s) are very important as they give a summary of what is being built. Is it a single project, phased work, or a collection of smaller projects at multiple locations? This list and the narrative description for each gives the underwriter a base line understanding of what’s being built. For multi-project programs, it’s helpful for this list to include the project values here as well.
   
   
2. Project Location Information
   Project location information is very important. You want to make it clear to the underwriters where the work is taking place because different jurisdictions have an impact on insurance coverage, how policies are rated, the endorsements/exclusions that will apply and limits/retentions that can be considered.
   
   
3. Trade Breakdown
   Project budgets will need to be broken down by various trades for each project. Those breakdowns will require payroll estimates to be broken down by Workers’ Compensation classification codes. Early on, these might not be available, and you may be forced to rely upon estimates for each trade cost and payroll. This is acceptable to most carriers. However, care must be taken that these estimates are reasonable since they are the basis for auditing once the program is closing out and final premiums are calculated. This is done by comparing estimated exposures to final audited exposures. Make sure your work with your General Contractor’s estimating team and/or your Wrap-Up broker to ensure the best possible estimates are used.
   
   
4. Project Schedules
   Project schedules impact the coverage that will be provided. For example, every annual period of construction will be provided with a separate annual general liability aggregate, unless endorsed to the contrary. Clearly detailing the project start and end dates are very important to the pricing since they capture the full term of construction and make certain the policy adequately covers the whole project. Most carriers will want to see the Gantt chart version of the schedule that shows all the various milestones of the work. If possible, it's always helpful to show an escalation of when there will be high number of workers on site.
   
   
5. Site Plans
   Carriers will need to see site plans of what’s being built and how it fits into the surrounding areas. Normally this is an overhead/plan view the of construction site and gives the carriers a visual to go along with project descriptions.
   
   
6. Project Renderings
   Even though project renderings aren’t always required, these are great to include in the underwriting submission as they expand on the site plans visual. The underwriters can see what the finished product will look like, which tends to give them an even greater comfort level with the work being done.
   
   
7. Logistics Plans
   Logistic plans allow the underwriters to see things like:
   •    how the project will be progressing
   •    when & where cranes will be erected
   •    where materials will be stored
   •    ingress & egress from the work site
   •    where workers will be parking their cars
   
   A well-thought-out logistics plan will show underwriters the work is likely to progress smoothly rather than chaotically, as confusion and uncertainty tend to lead to frequent losses.
   
   
8. Safety and Emergency Response Plans
   Problems are unavoidable. Every construction project is thrown curveballs, no matter how well planned it is, there is always the element of human error and bad luck. Having a plan to deal with those emergencies and detail the safety practices on the project site are important to a Wrap-Up carrier. Strong safety practices and emergency plans go a long way to limiting the severity of losses once they occur.
   
   
9. Quality Control Plan
   Do you have a quality control plan? Once the project is completed and put to its intended use the greatest risk of loss to the project is construction defect. Depending on which state the work is taking place in, the carrier can still be liable to pay for losses that manifest after the project completion that arise out of construction defect. Typically, this occurs anywhere from 2 to 10 years after the work has been completed. Therefore, executing a robust quality control plan as the work is occurring is extremely important.

So when should you collect all this information? Take your broker’s lead on the exact timing for your project but the earlier the better. At minimum, this information should be gathered 100 days before binding when placing a single project Wrap-Up. 

If you have any questions about data collection for a Wrap submission, reach out to TSIB and speak with one of our Wrap-Up Consultants.   

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: shutterstock.com/g/Yaroslav_Astakhov