Kitty Maccoll

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Underwriting and Broking in action Case
StudyManaging Risks in Large Construction or
Operational Projects

• Paul KnowlesManaging Director, JLT Limited
  Construction Unit

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Typical Image of Construction .

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But .

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Facts and Figures

• Global Construction Spend
• US5,000,000,000,000
• Insurance Construction Spend
• US5,000,000,000
• London Global Centre of Excellence

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Agenda

• Managing Risk
• Brokers View
• Underwriters View
• Loss Adjusters View
• QA

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Brokers View

• First Risk
• Winning the business
• Sources of Business
• Project Owners
• Contractors
• Financiers
• Producing Broker
• Ceding Insurance Companies

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Brokers View

• Second Risk
• Understanding the key project risks
• Natural catastrophe
• Technology
• Programme critical path
• Ground conditions
• Experience of parties
• External influences

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Brokers View

• Third Risk
• Matching / Designing Products for risk profile
• Product Range
• Construction / Erection All Risks
• Delay in Start Up / Advanced Loss of Revenue
• Third Party Liability
• Professional Indemnity
• Marine / DSU
• Environmental Liability
• Contractors Plant and Equipment
• Bonding

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Brokers View

• Fourth Risk
• Delivering the right price and product
• Choice of Markets
• London
• Europe
• International
• Usually a combination of all three
• Key determining factors
• Price
• Wording
• Financial Security
• Politics

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Brokers View

• Fifth Risk
• Delivering the service
• Placing the deal is just the beginning
• Contractual Risk Managing
• Site Visits
• Working within a dynamic environment
• Claims Management

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Underwriting

• Norman Alderton
• Zurich Global Corporate

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Big Projects

• Petro chemical
• Mixed Use e.g.in Emirates
• Fabrication plants
• Civil e.g. Hydros, tunnels, rail links, roads
• Caribbean leisure

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Risk

• Location perils / ground conditions / stability
  of community
• Construction methods/ materials / manufacture
• Operation testing and commissioning
• All causing
• Damage
• Delay in Completion
• Liability

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Underwriters Armoury

• Premium / rate
• Excess levels
• Policy cover
• Defects
• Maintenance
• Risk control
• Claims response

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Big Projects The Difference

• PML
• Fire / VPE / windstorm / earthquake / flood /
  subsidence and collapse
• Higher profile
• more interest, more involvement, more fear, more
  care?
• Better or worse risk?

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Delay in Completion

• Extent of financial loss
• Risk factors as above plus
• Lead times
• Complexity
• Float
• Ease of access to site
• Production capacity, options
• Seasonal?

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Third Party Liability

• Nearby commercial interests /density
• TP shipping / aircraft etc
• VRWS
• Work below ground
• ground conditions
• methods of excavation

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Risk Management

• Only ongoing influence
• Work with clients engineers
• Win / win
• JCOP fire
• JCOP tunnels
• Zurich Schools Design Guide
• Water damage MoU?

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London Construction Market

• Broker orientated
• Challenged by alternatives as world centre
• Insurers added value
• Cover
• Service
• Risk Control
• Claims Response