6 Challenges for Public Entities
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Construction has never been an easy business. There are plans to draw up, approvals to win, materials and heavy equipment to maneuver, workers to manage, and financiers to appease — usually within tight time constraints. Expanded opportunities at brownfields, increased value engineering requirements, and skilled labor shortages all add to the sector’s challenges.
“The complexity of construction exposures continues to rapidly increase,” said Bill Sullivan, Senior Vice President, Head of Construction Casualty, Berkshire Hathaway Specialty Insurance.
In this environment, contactors will want to reevaluate their insurance and risk management programs to ensure there are no coverage gaps, while at the same time addressing these emerging trends.
With the growth of urban centers in the U.S. and a scarcity of suitable building lots, contractors increasingly find opportunities in brownfield sites, which can be located in highly developed, densely populated areas. “At brownfield sites, contractors may have to deal with legacy pollution issues. They must be ready to respond to the possibility of such unknown site conditions. In addition, many brownfield redevelopments are high profile projects that local authorities have spent years nurturing,” Sullivan said.
Sullivan added, “Executing a project in a highly populated area means many potential impacted third parties. The contractor must negotiate and manage the impact work can have on the project’s neighbors. It’s a much different dynamic than working in a less populated setting.”
The growing demand for value engineering means contractors are taking on the responsibility to review each building system and component for value, quality, lifecycle and maintainability. They also maximize value for their customer by providing direction concerning alternative materials and construction methods.
“If the contractor recommends an alternate material that has a shorter lifecycle, it may wind up costing the customer more in the long run to replace that material. Because the contractor is the one who suggested the use of a specific material, they need to be aware that they have taken on a professional liability exposure they may not have had absent value engineering,” Sullivan said.
Shifting workforce demographics create another challenge for today’s contractors. On the one hand, contractors face a maturing workforce that is less experienced with new means and methods, while at the other end of the spectrum, contractors have new workers whose lack of experience can compromise project quality and exacerbate risks. Additionally, with respect to new workers, this inexperience can also create safety issues for both workers on-site and for the general public.
Against this backdrop of complex exposures, contractors are migrating to a new insurance approach that offers simplicity and enhanced protection. “In the past, contractors would typically secure separate coverages at the primary and excess levels from a portfolio of carriers. We’re now seeing customers and brokers looking at ways to achieve more seamless coverage from a single carrier. There is so much potential interplay between lines of coverage in construction that it’s important to have coordination between them,” Sullivan said.
One way to achieve integration is through the use of a single excess integrated follow form policy, which can schedule and follow multiple lines of underlying coverage, such as: general liability, environmental liability, employer’s liability, professional liability, and automobile liability (as opposed to having multiple separate insurance towers from numerous carriers). Aligning coverage through a single excess carrier may help to provide consistency in limits and tower attachment points and reduce coverage gaps. Perhaps most importantly, the integrated approach streamlines claims services through the single carrier, which avoids coverage disputes between multiple carriers providing different lines of coverage. Streamlined claims services also has the potential to reduce frictional claims expenses.
BHSI has been at the forefront in providing integrated excess solutions for contractors. The company brings to market several major advantages:
As Mr. Sullivan noted, “Our integrated excess solutions are not boilerplate programs. They are tailored to address unique challenges and meet the particular needs of each individual insured. We have the unique combination of experienced people, a strong balance sheet, a broad product and service portfolio, and a commitment to long-lasting customer relationships that is truly dynamic.”
To learn more, visit https://bhspecialty.com/.
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Berkshire Hathaway Specialty Insurance. The editorial staff of Risk & Insurance had no role in its preparation.
R&I: What was your first job?
I actually had three first jobs at the same time at the age of 16. I worked as a cashier in a fast-food restaurant, a bank teller and a debt collector for an immigration law firm.
R&I: Who is your mentor and why?
I have a few. The first one would be the first risk manager I reported to. He taught me the technical part of the job, risk financing, captives and insurance. I am also privileged to be mentored by Lori Goltermann (CEO of U.S. Retail for Aon Risk Solutions). From her I learned to be resilient and optimize life/work balance. Then of course I also have a circle of ladies at work who I lean in to!
R&I: How did you come to work in this industry?
I was once a bank teller and had a client who was an insurance agent. He would come in every day to make deposits. One day, he offered me a job. He said, “How would you like to have your own desk, your own phone and your own computer?” And I said, “When do I start?” I worked for this personal lines insurance company for six years.
R&I: Did you take to it immediately?
Yes, I did sales, claims and insurance accounting. I left for a couple years and that is when AAA came calling, which was my first introduction to risk management. I didn’t know there was such a thing as commercial insurance. They called me and the pitch was “how would you like to run a captive insurance company?”
R&I: What have you accomplished that you are proudest of?
It is not so much the job but I say that I am the true product of the American Dream. I came to the U.S. when I was 16. I worked three jobs because I didn’t want to go to high school (She’d already graduated high school in the Philippines.) I spoke very little English, and due to hard work, grit and a great smile I’m now here working with all of you!
R&I: What is your favorite book or movie?
In movies, it is a toss-up between Gone with the Wind and Big Daddy.
R&I: What is your favorite drink?
I like anything sweet. If you liquify a dessert that’s my perfect drink.
R&I: What is the most unusual/interesting place you have ever visited?
This is easy because I just got back from Barcelona on a side trip. I visited the Montserrat Monastery, which is a thousand-year old monastery. It was raining and foggy. I hiked for three hours and I didn’t see a single soul. It was a very peaceful place.
R&I: What is the riskiest activity you ever engaged in?
This is going back to working at a fast food chain when I was young. I worked in a very undesirable location in San Francisco. At 16 I used to negotiate with gang members so they wouldn’t rob me during my shift. I had to give them chicken so they wouldn’t rob me.
R&I: If the world has a modern hero, who is it and why?
I can’t say me. They have to be my kids Kyle and Hailey. They can make me laugh and cry within a half-minute of each other. Kyle is 10, a perfect Mama’s boy. Hailey is seven going on 18.
R&I: What about this work do you find the most fulfilling or rewarding?
I think the most fulfilling part is how you build relationships with people and then after a while they become your friends.
R&I: What is the risk management community doing right?
Risk managers do a great job of networking. They are number one. Which is not a surprise because the pillar of our work is building a relationship with underwriters, clients and brokers.
R&I: What could the risk management community be doing a better job of?
I am experiencing that right now; talent. We need to a better job in attracting and retaining talent. Nobody knows about what we do. You tell someone ‘I’m as risk manager’ and they give you a blank look. What does that mean?
We’re great marketers and we should use this skill set in attracting talent. We should engage our universities, our communities, even our yoga groups and talk to them about the exciting world of risk. It is an exciting career because there is nothing like it.
R&I: What emerging commercial risk most concerns you?
It would have to be the increasing cyber risk and the interdependency of systems.
R&I: What does your family think you do?
I took my seven year old daughter once to an insurance event that had live music, dancing and drinks. She thinks that whenever I go to an insurance meeting, I’m heading to a party.