Sharlene Horn

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OCIP
Presented by Sharlene Horn
Presented to Community College Internal
Auditors May 7, 2004

License 0451271
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Agenda

• History of Wrap-Ups
• SEWUP Overview
• Overview of OCIPs
• SEWUP Insurance
• SEWUP Administration

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Keenan Associates

• Full service consulting/brokerage firm
• 700 California school districts
• Health Care
• Employee benefits
• Workers Compensation
• Property Liability
• Founded 1972

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SEWUP

• Statewide Educational Wrap Up Program
• Joint Powers Authority (JPA)
• Provides Owner Controlled Insurance Programs
  (OCIP) to member school districts
• Offers insurance programs for new construction
  and modernization projects.

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SEWUP Team Introductions

• Sharlene Horn
• Vice President
• Alisa Hawkins
• OCIP/SEWUP Underwriter
• Desiree Arcene
• Administrative Asst.

• Sonya Clayton
• OCIP Administrator
• Sandra Nottingham
• OCIP Administrator
• Elsa Silva
• OCIP Administrator

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Jerry Windom SEWUP Sales Manager
Jerry Reguera SEWUP Sales Manager
Sharlene Horn Vice President
SEWUP
LCP
Alisa Hawkins OCIP Underwriter
Sonya Clayton OCIP Adm.
Elsa Silva OCIP Adm.
Sandy Nottingham OCIP Adm.
Monroe Khawaja LCP Adm.
David Hill Asst. LCP Adm.
Karen Meadows LCP Consultant
Tom Garvin LCP Field Consultant
Vacant Underwriting Manager
Desiree Arsene Adm. Assistant
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Wrap-Up Program Definitions

• Wrap-Up program which provides same insurance
  for all parties for specific project
• OCIP Owner Controlled Insurance Program
• CCIP Contractor-Controlled Insurance Program
• SEWUP Rolling OCIP

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What is an OCIP or Wrap-Up?

• Owner Controlled Insurance Programs are
  all-in-one programs that combine most of the
  major insurance coverages needed for a large
  construction project into one program.
• Plainly put, OCIP is insurance in bulk. The
  buyer purchases a large volume of insurance for a
  construction program, thus benefiting from
  economies of scale.

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Wrap-Up History

• Wrap-Ups have long been used the most common
  method of providing insurance for construction
  projects in Europe and the United States.
• 1940s Introduced to United States on defense
  plants.
• 1950s applied to non-defense capital program
  such as New York Citys public housing.
• 1999 Legislation changed to allow Public
  Schools to use OCIPs.

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Wrap-Up History and Use

• Estimated over 400 public and private programs in
  the U.S.
• State laws regulate OCIPs
• Average single project value 100-150 Million

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OCIP Program Benefits/Advantages

• Relief of Administrative Burden
• District/Owner
• Construction Manager
• General Contractor
• Broader Insurance Coverage
• Single Coverage all parties
• Cost Savings(1-3 construction value)
• Positive public image

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Traditional Structure/Construction Insurance

• Traditional Approach
• Traditionally Owners have required Contractors to
  provide Workers Compensation General Liability
  coverages for work performed on the job site
• The procurement of insurance coverage is a
  fragmented process
• Through an OCIP, the Owner pays for this
  insurance cost as a pass-through or line item on
  the Contractors bid

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Wrap-Up Approach to Construction

• The Owner purchases insurance for all Contractors
  on the Project
• Because of economies of scale and avoiding
  Contractors mark-up, Owner can purchase a
  superior program
• Single insurance program covering the job-site
  risks of the Project Owner, Construction Manager,
  General Contractor and all Contractors of every
  tier
• An OCIP allows an Owner to exert leverage on
  behalf of the Contractors to provide the best
  coverage, highest quality safety and claim
  service at a substantially lower cost

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OCIP Program Financial Benefits

• Retrospective Rating Plans
• Guaranteed Cost Program
• Premium Dividend Potential
• Guaranteed Rates for Project Term
• WC GL
• Economies of Scale

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OCIP Coverages (SEWUP)

• Workers Compensation Employers Liability
• Limits Statutory / 1,000,000 E.L.
• 0 Deductible
• Commercial General Liability
• 5,000,000 per occurrence
• 25,000,000 Annual Aggregate (Per District)
• 5,000 Deductible Per Occurrence
• Builders Risk (C.O.C.)
• Project Construction Value _at_ Replacement Cost
• 5,000-25,000 Option Deductible

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OCIP Coverage Features (SEWUP)

• Workers Compensation
• Waiver of Right to Recover
• D O Endorsement
• 1,000,000 Employers Liability Limit
• Experience Follows The Contractor
• General Excess Liability
• Broad Form Contractual Liability
• Broad Named Insured
• 10 Year Products / Completed Operations
• Waiver of Rights to Recover
• All Coverages Concurrent with Districts Existing
  PC Programs

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Builders Risk

• Insures against loss or damage to insured
  property
• Covers Owners, CM, Contractors and Subcontractors
• Includes
• Transit, off-site storage, temporary works
• Testing
• Care, custody and control
• Earthquake, flood (optional)

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Optional OCIP Coverages (SEWUP)

• Pollution Legal Liability
• 25,000,000 Each Loss / Aggregate
• 10,000 Deductible
• Owners Protective Professional Indemnity (OPPI)
• 2,000,000 per claim / Aggregate
• Above 1 Million Underlying A/E Policy
• 25,000 Deductible

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OCIP Program Features

• Administration
• Review, Analyze and Implement Insurance
  Provisions of Contracts
• Enroll all Contractors and Subcontractors
• Issue Certificates of Insurance and Insurance
  Policies
• Collect Monthly Payroll from all Contractors

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OCIP Program Features

• Loss Control Services
• Pre-Construction Loss Control Compliance Review
• On-Site Inspections
• Participate in Tool-Box Meetings
• Safety Training Materials
• Claims Management
• Manage Claims Reported to Carriers
• Conduct File Reviews
• Monitor Carrier Reserves
• Facilitate Timely Claim Processing
• Mediate Disputed Claims

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OCIP Program Review
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OCIP Success Begins with Communication

• Effective and Continual Communication/Coordination
  
• SEWUP Team
• Account Executives
• District (Representative)
• Construction Manager/General Contractor
• Subcontractors

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Administration in Context
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Pre-Bid Meetings

• Pre-Bid Handbook
• Provide OCIP information to potential contractors
• Review lines of insurance provided and those
  excluded
• Advise name of carriers
• Review limits for each line
• Review requirements for off-site certificates
• Review Insurance Qualification/Worksheet

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SEWUP Pre-Bid Handbook

• Contents
• Definition of Terms
• Instruction to Bidders
• OCIP Insurance Coverage Summary
• Insurance NOT provided by OCIP
• Contractor Insurance Requirements
• Off-Site certificate Checklist/Sample
• OCIP Contact Directory

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Pre-Construction Meetings (SEWUP)

• Provide OCIP enrollment information to awarded
  contractors and review
• Project Insurance Manual
• Enrollment forms in detail
• Off-site certificates
• Procedures for subcontracts awarded
• Monthly payroll reporting procedures
• Claims reporting guidelines

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Who is Insured/Excluded in Program

• INSURED
• Owner
• Construction Manager
• Contractors
• Subcontractors of all tiers
• Work within the Site
• Anyone who is Enrolled

• EXCLUDED
• Vendors
• Suppliers
• Deliveries to/from the Site
• Off site fabricators
• Manufacturing activities away from Site
• Security Services

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Risk Management Information System

• Summed up in one word CIMS 2004
• Coordinated Insurance Management System
• Acacia Technology Management, Inc.

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OCIP Program Features

• Risk Management Information System On-Line
  Management System
• Single source for all insurance information
• Census Data
• Rates by Class Codes
• Contractor Enrollment
• Premium Calculation Comparisons
• Payroll Summaries
• WC/GL Claims Detail (Real Time)
• Frequency/Severity Injury Reports

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CIMS System Data Base Structure
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CIMS 2004 Reports

• Premium Credit Calculations
• Contractors rates
• Program rates
• (by project and all contractors)
• Comparison Analysis
• Estimated projects cost savings
• ACTUAL project cost savings at closeout

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SEWUPCurrent projects

• 58 current on-going projects
• Total construction value over 600,000,000
• Construction value range from 25,000 to
  30,000,000
• Anticipate 1 billion in construction value
  fiscal year-June 30

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Questions Answers