What is a wrap up?
Benefits
• Comprehensive
insurance coverage for all
•
Higher limits of coverage
•
Safer construction site
•
Reduced litigation
• Elimination
of redundancies in both costs and services
• Economies
of scale
• Allows
for more competitive use of MBE and WBE
companies
When
to Use a Wrap Up
•
When is a Wrap-Up a good idea?
How
It Works
•
Gathering the players
•
Getting started
FAQ
- From Your Perspective
• Sponsor
•
Contractor (aka subcontractors)
• Broker
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Benefits
> Economies of Scale
A large project or a combination of midsized projects will
benefit financially depending on several factors, such as:
location, type of construction, the construction manager,
the subcontractor environment, the insurance market, and how
the OCIP is purchased in the insurance market. By underwriting
a large project, your insurance company spreads the risk across
the large number of project employees. Two cost factors influence
your financial savings, Fixed and Variable:
Fixed Costs: These costs are built into the
project. Traditionally, a subcontractor includes insurance
costs in his bid, then the general contractor includes their
insurance, and the owner adds contingency coverage on top
of that creating three tiers of insurance, paid at higher,
individual rates. In a wrap up your project saves by lowering
the fixed cost portion. Due to economies of scale you can
purchase a single plan for the entire project for less than
the traditional cost of insurance. With a single insurance
carrier you purchase your insurance in bulk, so you have more
participants paying less for greater coverage.
Variable Costs: The variable portion is dependent
on the amount of risk the sponsor assumes and the number of
claims made over all. The higher risk might mean the sponsor
covers a $250,000 deductible per claim for the overall project.
This provides incentive for safety first and a strong claims
management program. The safer the site, the more money the
sponsor saves.
By negotiating savings to lower your Fixed costs at the outset,
and accepting higher risk variables to reward low-incident
sites, your project saves a great deal of expense.
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