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A Streamlined Approach to Modern Construction Challenges

Against a backdrop of complex construction exposures, contractors are migrating to a new insurance approach that offers simplicity and enhanced protection.
By: | October 3, 2017 • 4 min read

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.

Current Trends Compound Complexity

Brownfield Sites

Bill Sullivan, Senior Vice President, Head of Construction Casualty

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.”

Value Engineering

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.

Workforce

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.

Meeting Today’s Challenges With An Integrated Solution

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: Uniquely Positioned to Be Your Integrated Excess Insurer

BHSI has been at the forefront in providing integrated excess solutions for contractors. The company brings to market several major advantages:

  • With its financial strength, BHSI can offer the capacity needed for a first layer integrated excess program;
  • BHSI is committed to excellence in claims handling, with an emphasis on experience, transparency and accessibility;
  • BHSI focuses on collaboration among team members, keeping lines of communication open across different lines written; and
  • BHSI provides a wide range of insurance products, giving it the expertise needed to manage the diverse multi-lines of coverage provided by an integrated insurance program.

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/.

The information contained herein is for general informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any product or service. Any description set forth herein does not include all policy terms, conditions and exclusions. Please refer to the actual policy for complete details of coverage and exclusions.
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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.




Berkshire Hathaway Specialty Insurance (www.bhspecialty.com) provides commercial property, casualty, healthcare professional liability, executive and professional lines, surety, travel, programs, medical stop loss and homeowners insurance.

More from Risk & Insurance

More from Risk & Insurance

Risk Management

The Profession

Pinnacle Entertainment’s VP of enterprise risk management says he’s inspired by Disney’s approach to risk management.
By: | November 1, 2017 • 4 min read

R&I: What was your first job?

Bus boy at a fine dining restaurant.

R&I: How did you come to work in this industry?

I sent a résumé to Harrah’s Entertainment on a whim. It took over 30 hours of interviewing to get that job, but it was well worth it.

R&I: If the world has a modern hero, who is it and why?

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The Chinese citizen (never positively identified) who stood in front of a column of tanks in Tiananmen Square on June 5, 1989. That kind of courage is undeniable, and that image is unforgettable. I hope we can all be that passionate about something at least once in our lives.

R&I: What emerging commercial risk most concerns you?

Cyber risk, but more narrowly, cyber-extortion. I think state sponsored bad actors are getting more and more sophisticated, and the risk is that they find a way to control entire systems.

R&I: What is the riskiest activity you ever engaged in?

Training and breaking horses. When I was in high school, I worked on a lot of farms. I did everything from building fences to putting up hay. It was during this time that I found I had a knack for horses. They would tolerate me getting real close, so it was natural I started working more and more with them.

Eventually, I was putting a saddle on a few and before I knew it I was in that saddle riding a horse that had never been ridden before.

I admit I had some nervous moments, but I was never thrown off. It taught me that developing genuine trust early is very important and is needed by all involved. Nothing of any real value happens without it.

R&I: What about this work do you find the most fulfilling or rewarding?

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Setting very aggressive goals and then meeting and exceeding those goals with a team. Sharing team victories is the ultimate reward.

R&I: What is the most unusual/interesting place you have ever visited?

Disney World. The sheer size of the place is awe inspiring. And everything works like a finely tuned clock.

There is a reason that hospitality companies send their people there to be trained on guest service. Disney World does it better than anyone else.

As a hospitality executive, I always learn something new whenever I am there.

James Cunningham, vice president, enterprise risk management, Pinnacle Entertainment, Inc.

The risks that Disney World faces are very similar to mine — on a much larger scale. They are complex and across the board. From liability for the millions of people they host as their guests each year, to the physical location of the park, to their vendor partnerships; their approach to risk management has been and continues to be innovative and a model that I learn from and I think there are lessons there for everybody.

R&I: What is the risk management community doing right?

We are doing a much better job of getting involved in a meaningful way in our daily operations and demonstrating genuine value to our organizations.

R&I: What could the risk management community be doing a better job of?

Educating and promoting the career with young people.

R&I: What have you accomplished that you are proudest of?

Being able to tell the Pinnacle story. It’s a great one and it wasn’t being told. I believe that the insurance markets now understand who we are and what we stand for.

R&I: Who is your mentor and why?

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John Matthews, who is now retired, formerly with Aon and Caesar’s Palace. John is an exceptional leader who demonstrated the value of putting a top-shelf team together and then letting them do their best work. I model my management style after him.

R&I: What is your favorite book or movie?

I read mostly biographies and autobiographies. I like to read how successful people became successful by overcoming their own obstacles. Jay Leno, Jack Welch, Bill Harrah, etc. I also enjoyed the book and movie “Money Ball.”

R&I: What is your favorite drink?

Ice water when it’s hot, coffee when it’s cold, and an adult beverage when it’s called for.

R&I: What does your family think you do?

In my family, I’m the “Safety Geek.”

R&I:  What’s your favorite restaurant?

Vegas is a world-class restaurant town. No matter what you are hungry for, you can find it here. I have a few favorites that are my “go-to’s,” depending on the mood and who I am with.

If you’re in town, you should try to have at least one meal off the strip. For that, I would suggest you get reservations (you’ll need them) at Herbs and Rye. It’s a great little restaurant that is always lively. The food is tremendous, and the service is always on point. They make hand-crafted cocktails that are amazing.

My favorite Mexican restaurant is Lindo Michoacan. There are three in town, and I prefer the one in Henderson as it has the best view of the valley. For seafood, you can never go wrong with Joe’s in Caesar’s Palace.




Katie Dwyer is an associate editor at Risk & Insurance®. She can be reached at [email protected]