alliance of schools for cooperative insurance programs
TRANSCRIPT
Alliance of Schools for Cooperative Insurance ProgramAlliance of Schools for Cooperative Insurance Program 16550 Bloomfield Avenue, Cerritos, California 9070316550 Bloomfield Avenue, Cerritos, California 90703
Phone (562) 404Phone (562) 404--80298029 Fax (562) 404Fax (562) 404--80388038
Alliance of Schools for Cooperative Alliance of Schools for Cooperative Insurance ProgramsInsurance Programs
PASADENA UNIFIED SCHOOL DISTRICTOwner Controlled Insurance Program (OCIP)
Overview and Proposal Presentation
SEPTEMBER 30, 2009
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TodayToday’’s Agendas Agenda
Overview of ASCIP’s Owner-Controlled Insurance Program for School Construction
What is the traditional approach to insurance and safety in school construction?
How does an Owner Controlled Insurance Program (OCIP) differ from traditional insurance and safety programs for school construction?
How does ASCIP’s OCIP partnership uniquely support the school district, its community, and save money?
GC 4420.5 “…minimize the expenditure of public funds on the project in conjunction with the exercise of appropriate risk management.”
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ASCIP OCIPASCIP OCIP Program HighlightsProgram Highlights
Largest Rolling Scholastic OCIP in California
Approximately $2 Billion in Total Active/ Completed Project Values
26 Member Districts Participating
9% Loss Ratio as of December 2008
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Alliance of School for Alliance of School for Cooperative Insurance ProgramsCooperative Insurance Programs
Formed in 1980, ASCIP is a public agency joint powers authority (JPA)
Provides risk sharing pools to 154 California public school districts, community colleges, charter schools and subsidiary JPAs
Not for profit
Formed OCIP in 2000 to offer JPA members a quality, cost effective alternative for construction projects
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ASCIP OCIP Loss RatioASCIP OCIP Loss Ratio
Compare to 65%
0%10%20%30%40%50%60%70%
Loss Ratio 65% 22% 9%
Traditional Contractor Program ASCIP OCIP I (Zurich) ASCIP OCIP III
(Liberty Mutual)
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Traditional Insurance ProgramTraditional Insurance Program
Contractors/Subs all have own insurance carriers
District/CM manage insurance and safety compliance while supervising construction efforts
District/CM is responsible:
Manage insurance documents for contract compliance for all parties
Verifying insurance/certificates/endorsements
Track coverage certificates/endorsements at renewal
Providing oversight of safety plan compliance and implementation
Ultimate responsibility for accidents and injuries (deep pocket)
Typical Challenges:
Insurance not in compliance with contract and/or lapse at renewal
Safety may be sidelined when time/cost pressures occur
Finger pointing by various insurance carriers with loss occurs
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OCIP ConceptOCIP Concept
Single insurance program -
one major carrier
OCIP covers the entire construction project including district (owner), contractors, and all subs
OCIP Administrator responsibilities:
Enroll all contractors/sub-contractors for coverage
Verify insurance/certificates/endorsements
Ensure safety compliance with contractors
Provide safety training and incentives
Manage all claims and litigation arising from the project
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OCIP BenefitsOCIP Benefits
Completes Projects Safely and On Time
Provides Broad Coverage and Deductible Limits
Offers access to WeTip, a safe means to report crime information for cash reward
Provides insurance fraud prevention through verification of enrolled subcontractors’
certificates of insurance
Encourages Small and Local Business Participation
Supports Project Labor Compliance Efforts
Reduces the Potential for Cross-Litigation
Cost Savings
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Broad Coverage & Broad Coverage & Dedicated LimitsDedicated Limits
LIMITS PER PROJECT
Workers’
Compensation/
Statutory/$26 Million
Employer’s Liability
General Liability $29 million
Ten (10) year completed operations
Crisis Intervention Coverage $250,000
Builders’
Risk
Optional**As an ASCIP member, the district currently has $50MM in Builder’s Risk coverage per
occurrence at no additional costs. Optional Excess builder’s Risk coverage should be considered for those projects greater than $50MM in value.
LIMITS PER PROJECT
Workers’
Compensation/
Statutory/$26 Million
Employer’s Liability
General Liability $29 million
Ten (10) year completed operations
Crisis Intervention Coverage $250,000
Builders’
Risk
Optional**As an ASCIP member, the district currently has $50MM in Builder’s Risk coverage per
occurrence at no additional costs. Optional Excess builder’s Risk coverage should be considered for those projects greater than $50MM in value.
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Maintenance DeductiblesMaintenance Deductibles
General Contractor
We recommend the district consider the use of a minimum maintenance deductible ($5,000-
$25,000) per occurrence because it will ensure that contractors will take affirmative responsibility for securing property at construction site and can help fully or partially offset the district’s Builders’
Risk coverage deductible by the general contractor’s maintenance deductible. (No Deductible applies to Builders’
Risk Coverage)
Multi-Prime
Special consideration should be made when determining maintenance deductibles on multi-
prime projects so that overlapping and duplicative costs are not incurred by the district.
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Coverage ExcludedCoverage Excluded
Automobile Liability & Automobile Physical Damage
Contractor’s Equipment
Hazardous Abatement
Earthquake
Flood
Blasting
Crane Ball Operated Demolition
Demolition over 25% of Project Value
Surety Insurance (Bonding for Contractors precluded by GC 4420 in an OCIP)
**Note –
Districts do not generally have Earthquake or Flood on any other buildings.
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OCIP Supports Small & Local OCIP Supports Small & Local BusinessBusiness
Avoid costs of minimum insurance premium obligations
Enhance insurance coverage/limits and terms/conditions
Provide safety support and expertise
Coordinate and advocate claims handling activities with carrier and legal counsel
Avoid costs of minimum insurance premium obligations
Enhance insurance coverage/limits and terms/conditions
Provide safety support and expertise
Coordinate and advocate claims handling activities with carrier and legal counsel
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OCIP Support Project Labor OCIP Support Project Labor Compliance EffortsCompliance Efforts
Consulting services to review Project Labor Compliance plan and implementation
Providing consolidated payroll data to the Labor Compliance Officer as a secondary confirmation of overall payroll incurred
Cross-referencing of construction employees confirmed on school jobsite
Consulting services to review Project Labor Compliance plan and implementation
Providing consolidated payroll data to the Labor Compliance Officer as a secondary confirmation of overall payroll incurred
Cross-referencing of construction employees confirmed on school jobsite
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Cost Savings ExampleCost Savings Example
Hard Construction Costs: $ 25,000,000Project Duration: TBD
Hard Construction Costs: $ 25,000,000Project Duration: TBD
Modernization/New Construction Project
OCIP Premium: $700,000
(2.8% of Hard Cost)
Actual Contractor
$1,025,000Insurance Cost: (4.1% of Hard Cost)
Savings
$325,000
OCIP Premium: $700,000
(2.8% of Hard Cost)
Actual Contractor $1,025,000Insurance Cost: (4.1% of Hard Cost)
Savings
$325,000
Final Premium is based on Final Hard Costs including change orders.
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Broker CompensationBroker Compensation
The OCIP Rate is equal to 2.8% of theProject Hard Construction Value and the rate includes
the following sub-percentage compensation:
Arthur J. Gallagher & Co. Insurance Brokers’
of California, Inc. receives .4% of the Hard Construction Value as a fee for their role as ASCIP’s OCIP Program Administrator, which includes program administration, brokerage, safety and loss control, and claims management services/oversight.
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Are Cost Savings Real?Are Cost Savings Real?
Evaluating Costs Through the Bidding Process
Prepare construction bid language to include bidding net of insurance costs
Award bid to winning contractor
Winning contractor to provide insurance costs to construction project for all contractors/sub-
contractors for comparison to OCIP cost. The general contractor or prime contractor will be required to submit their declaration pages for Workers’
Compensation and General Liability
Construction project to proceed with or without OCIP program at District’s discretion
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Safety & Loss PreventionSafety & Loss Prevention
A Master Safety Plan can be adopted and used by all contractors throughout the project
Planning a safe project in the earliest phases insures that safety shall be viewed as part of the job
OSHA 10-Hour Outreach Classes offered to contractors for free
Safety inspections and consulting support by OCIP administrative team and insurance carrier
Loss control included
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Safety & Loss Prevention Safety & Loss Prevention
Loss control consultants are assigned to the project based on project size.
Loss control manager provides incentives for safety i.e. free lunch, prizes, Z87.1 Safety Glasses.
PIZZA!
100 Work Days With No Medical Claims – Lunch is on Us!
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Gallagher OCIP Materials
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Program Safety RequirementsProgram Safety Requirements
Drug Program –
Initial Hire and Post-Accident
6’
Fall Protection, harnesses and lanyards required if other protective means are not used
OSHA “Serious”
Violations –
No more than 5 serious violations within 5 years with no more than 2 serious repeats in 5 years
OSHA “Willful”
Violations –
NONE
Hardhats & Safety Glasses are required at all times & other Personal Protective Equipment (PPE) required by work being conducted
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Program Safety Recommendations Program Safety Recommendations
Experience Modifier –
1.25 composite project average measured over a 5 year history.
Any “paper contractors”
participating on a project should participate and pass the 10-hour OSHA Construction Safety training course.
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Claims ManagementClaims Management
Claims management and oversight provided by the OCIP Administrator
Comprehensive registration methods to ensure workers on our District’s site are covered
Clinics, claim forms and processes are approved prior to the start of construction
Workers’
compensation and liability claims are handled by ONE insurer, thereby eliminating the “finger pointing”
among insurers that takes place on a traditional project (reduces stoppages)
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AdministrationAdministration
CipWorks is a web based tool that will help you track the success of your OCIP and ease the expense and time associated with administration of a OCIP.
It is real time, 24/7 and available from anywhere.
CipWorks won A.M. Best’s first E-Fusion Award for internet based programs for managing construction OCIP’S.
For the administrator and the General Contractor, CipWorks provides up-to-the minute details of:
Contractor enrollment documents
Automated follow-up for missing documents
Off-Site Certificate compliance
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JOB OVERVIEW PAGE
CIPWORKS allows the OCIP team members to easily stay in touch. Click on a team member name and send them an email from your own email system.
CIPWORKS allows the OCIP team members to easily stay in touch. Click on a team member name and send them an email from your own email system.
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ASCIP/Gallagher Wrap Up ASCIP/Gallagher Wrap Up ExpertiseExpertise
Construction Industry Experience
Over 6,000 contractor clients in California
50 Active Wrap Up programs nationally
School Construction Experience –
147 projects
Scholastic Experience –
ASCIP 170 members plus
Innovative Ideas
Safety Tool Box Kit
Hard Hat Sticker Program
State of the Art RMIS “CipWorks”
Strong Carrier Relationships
Commitment to Partnering
Minority Business Enterprises & Women Owned Businesses
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Ensuring OCIP Partnership Ensuring OCIP Partnership SuccessSuccess
Outstanding support from the Board of Trustees and other oversight committees
Clear communication, understanding and commitment of the entire construction team including district personnel, consultants and contractors
Involvement of the ASCIP/Gallagher OCIP Team early in the planning process
Project safety and timely completion must be the primary goal and focus
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ReferencesReferences
Construction Managers Business Officials Facilities Directors
Tomas P. Lynch, Project ExecutiveSeville Construction Services, Inc.(714) 768-1220
Bill Sylvia, DirectorLos Rios CCD (916) 568-3048
Matt CovellaPalos Verdes Peninsula USD(310) 378-9966
Jaime PaceMcCarthy (949) 500-0735
Pearl IizukaPalos Verdes Peninsula USD(310) 378-9966
Buck Weinfurther Downey Unified School District(562) 469-6520
Atta H. Alsaleh, CCM CEOAPM, Inc.(909) 305-2332
Michael Bishop, Asst. Superintendent Business Services -
Paramount USD(562) 602-6025
Darryl A. Odum, DirectorRancho Santiago CCD (714) 480-7513
Tom Lavia, Senior Project ManagerDouglas E. Barnhart(562) 904-0518
Kris Olafsson, Dpty. SuperintendentBusiness Services –
El Monte CSD(626) 453-3790
John M. Didion, Exec. Vice ChancellorRancho Santiago CCD(714) 480-7489
Gus Gonzales,
Rio Hondo CCD(562) 9008-7088
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APPENDIXCalifornia Government Code Section 4420