Risk Scenario

A Paramount Parable

Talent shortages and bidding wars undermine a construction company’s ability to stay competitive.
By: | March 25, 2014 • 8 min read
Risk Scenarios are created by Risk & Insurance editors along with leading industry partners. The hypothetical, yet realistic stories, showcase emerging risks that can result in significant losses if not properly addressed.

Disclaimer: The events depicted in this scenario are fictitious. Any similarity to any corporation or person, living or dead, is merely coincidental.

Home for the Holidays

Neal Chambers surveyed the holiday turkeys on display at his local grocer on Nov. 23 and mused. Fresh or frozen? Tom or hen? Free range or kosher? Locally produced or from the foothills of the Smoky or the Sierra Mountains?

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Chambers threw thrift to the wind and plunked down $52 for a 16-pound organic bird from Upstate New York.

What the heck? After four brutally slow years, the construction company he managed risk for was showing signs of reemergence.

True, the company’s estimators were not happy. Where once they needed to bid 10 jobs to land one, each job now took 30 or 40 bids to land.

Neal’s company, Paramount Construction Co., based in Des Moines, Iowa, worked with larger companies historically.

But in order to land projects, it was now moving down to the middle market and competing against smaller regional operators with local expertise. This was not an easy road to hoe.

But Paramount was doing what it felt it needed to do to compete successfully.

At the office holiday party on Dec. 19, held at the River Bluff Country Club, Neal could see signs that the C-suites were feeling a little better about things. Nice carving station, good wine in the glasses and some generous door prizes. He took in a deep breath and let it out.

Things had been tough for a while. He’d been working hard. He’d been worried.

“Go ahead, have a drink,” he told himself. “It’s free and now is as good a time as any.”

Scenario Partner

Scenario Partner

Neal had one glass of wine in him and was waiting his turn to fill his plate at the sushi appetizer table when he saw one of the vice presidents, Tom Murphy, lift his phone to his ear.

As he listened to the caller, Murphy turned and looked at Neal. With his other hand, he gestured to Neal to join him. Murphy’s hand was free because he did not drink at company functions … ever.

“It’s Constantine,” Murphy said in a whisper when Neal got closer. “Something’s up. He tried to reach you but…”

Murphy shrugged non-judgmentally.

Constantine, head of operations. Good guy. No nonsense.

“This is Neal Chambers,” Neal said into Murphy’s phone.

“Neal, it’s Jonny Constantine. We’ve got a bit of a situation.”

“Shoot,” Neal said.

Constantine exhaled audibly into the phone. Neal could tell that Constantine was a little upset.

Neal shot a look of worry at Murphy.

“Look, we just had an accident with an excavator operator on the site here in Mille Lacs. We’ve got one seriously injured employee and some structural damage to a neighboring building.”

“How bad is the injury?” Neal said.

“It’s not pretty. I think this poor kid is going to lose his left leg below the knee,” Constantine said.

“And the building?”

“Well. The wall on the demo wasn’t supported right and the operator knocked it into this neighboring wall. It was a pretty big bump.”

Neal hung up with Constantine and gave Murphy his phone back.

As he turned his own phone on to check messages, Neal Chambers felt any holiday warmth drain out of him. The wine that had been so enjoyable 20 minutes ago now struck him like a cheap depressant.

2014 was supposed to be Paramount’s breakout year. But now Chambers had a significant workers’ compensation and general liability claim to worry about.

Looking around the brightly lit room at his fellow employees, Neal Chambers had an uneasy feeling that 2014 wasn’t going to be that great after all.

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No Bench Strength

What worried Neal Chambers were the personnel cuts Paramount undertook to survive during the brutal commercial construction downturn that seized the country during the Great Recession.

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The most worrisome cuts came in the area of safety, where some highly paid talent had been laid off. But there were also cuts in estimating, where other senior personnel with beefier paychecks left the company.

You couldn’t put the cart before the horse. Although things were turning around, Paramount was not yet at a place where it could hire big ticket talent to fill the gaps. Not yet.

Yet the company was trying to grow again and take on more projects. The combination worried Neal Chambers.

The accident with the excavator in Mille Lacs wasn’t catastrophic. But it was the beginning of a series of workplace accidents that plagued the company through the first six months of 2014.

Neal’s conversations with finance added to his anxiety.

“We’re just not making the money on these projects I thought we were going to be,” said Tom Murphy’s elder brother Pat Murphy, the company CFO.

Bidding for projects in unfamiliar territories and on unfamiliar scales, Paramount’s overworked estimators were missing the mark time and again.

The combination of an increased injury frequency rate and thinner margins was not making a good impression on Paramount’s surety and insurance underwriters.

Both Pat and Neal feared that year-end premium increases could be in the works.

Paramount’s revenue shortfalls created friction with subcontractors.

Jonny Constantine got into several heated arguments with subcontractors, alleging that they were botching projects by not moving more efficiently.

There were now a handful of legal proceedings underway. In those cases, Paramount was alleging that subcontractors violated the terms of their contracts by not completing the work in time, or completing it in substandard fashion.

Win or lose, those lawsuits meant one thing to Neal Chambers and Pat Murphy. They meant more costs, more margin erosion.

“We’re in a tight spot,” Neal Chambers said.

“I know we are,” Pat said, somewhat impatiently.

“The thing is, I don’t know what we can do between now and 2015 renewals to make a better impression,” Neal said.

“It’s almost like a roll of the dice,” he added. “I don’t know what else we can get out of the safety department in terms of management.”

“We need better talent and more of it,” Pat said.

The question was where.

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A Horse With No Name

The answer to Neal’s question, as it turned out, was “nowhere.”

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The talent crunch that Paramount was experiencing, and which was causing it so much pain, was not isolated to Paramount. But some of its competitors moved more quickly than Paramount in acquiring and retaining the talent to help them take full advantage of the upturn.

Others moved even less effectively than Paramount. But in a competitive economy, being in the middle was no place to be.

As 2014 moved from the second quarter to the third and fourth, adding to Paramount’s workers’ compensation woes and its sinking profit margins came yet another issue.

That issue was increasing commodities prices. Paramount’s overworked estimators, working in the unfamiliar middle market, failed to take into account a gradual increase in the cost of steel, copper wiring and other key construction materials.

There simply was no place to turn to hire the sort of experience in safety or in estimating that could put Paramount back on track.

As Paramount’s executives looked forward to their year-end renewals for their insurance programs, the company was looking at unpalatable premium increases.

“You’re looking at a 30 percent mark-up with your workers’ compensation premiums and at least a 25 percent increase in the amount of collateral you’re going to have to put up in workers’ compensation and in surety,” said the company’s broker, Ed Scarborough. “You’re also looking at an increase in your general liability.”

The construction market continued to recover. But Paramount now needed to play defense.

Faced with insurance and surety increases and declining margins, Paramount had no choice but to do what it didn’t want to do. Already bereft and hamstrung due to a lack of talent, Paramount undertook more layoffs.

One of the first to go was Neal Chambers.

In November of 2014, Neal Chambers and his daughter Annabelle went shopping for a turkey. Annabelle was fourteen and well versed in sustainable agriculture practices at school.

“We’re getting an organic turkey, right?” she asked her father.

“No, Annabelle, I’m afraid not,” Neal said.

Neal reached into the meat freezer and pulled out a frozen Honeybreast turkey and threw it into his shopping cart with a disheartening “clang.”

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Risk & Insurance partnered with Liberty Mutual Insurance to produce this scenario. Below are Liberty Mutual Insurance’s recommendations on how to prevent the losses presented in the scenario. These lessons learned are not the editorial opinion of Risk & Insurance.

1. Value is replacing price: It’s no longer enough to be the lowest bidder. Contractors must now prove to clients that they have the capacity to deliver a project that is the most cost-effective in the long term. That means not only delivering a quality product, but having the risk management program and coverage in place to mitigate potential finger pointing and costly litigation down the road.

2. Keep an eye on commodities: Nowhere are the realities of the global economy more evident than in the area of commodities. Demand cycles for copper, steel, coal and other materials in developing or maturing economies are going to have an impact on prices here at home. Models that take into account commodities fluctuations will be increasingly important. In addition, any new rating programs based on Construction Value should be carefully evaluated compared to a payroll based program.

3. Talent rules: Qualified estimators and safety officers left the construction industry in droves during the downturn. Making sure the talent is in place to take advantage of the upturn in the rebounding commercial construction business is an important consideration. Don’t overlook the added value of a well-documented quality assurance program.

4. Understand new geographies: Competing in this new market may mean having to enter new geographic areas to find business. Trying to compete in New York state without understanding its Byzantine labor laws would be a mistake. So would entering into any new geography without an understanding of local regulations and how they could impact costs. Conversely, demonstrating local experience to a client would be a key selling point here.

5. Delivery methods matter: New markets mean new delivery methods. Whether it is design-build, identifying a construction manager at risk, or the complexities of public-private or international partnerships, insurance and risk mitigation are going to have to be adequate to cover these trending delivery methods. Effective communication amongst all parties including contractual relationships continues to be a vital aspect of any project.



Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]
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Risk Scenario

An Insatiable Beast

A beverage maker’s programmable logic computers are destroyed by a cyber worm.
By: | November 2, 2016 • 9 min read
Risk Scenarios are created by Risk & Insurance editors along with leading industry partners. The hypothetical, yet realistic stories, showcase emerging risks that can result in significant losses if not properly addressed.

Disclaimer: The events depicted in this scenario are fictitious. Any similarity to any corporation or person, living or dead, is merely coincidental.

Part One: Who Kicked the Door In?

Executives with Sweet Life are in a self-congratulatory mode.

Having just plunked down $15 million for a new, just-in-time processing and shipping system, the company leadership feels poised for even greater success.

Sweet Life began its existence in a guest house on an estate in upstate New York owned by the parents of company founder Josh Saltwood.Scenario_AnInsatiableBeast

Starting with a then-unknown Kombucha product, the company grew, selling Kombucha, coconut water and a menu of flavored sparkling water sourced from unquestionably pure springs.

Walk into almost any tony yoga studio along the Atlantic seaboard and you would see some bottle or can with the Sweet Life label on it.

“I want to congratulate everyone involved in this effort,” Saltwood tells his assembled leadership team during a celebratory, well-lubricated meal at one of the best vino-centric restaurants in the Finger Lakes.

Smiles all around, except for Anne Margate, the company’s chief risk officer. Saltwood notices her mood and lifts a wine bottle in her direction as if to offer her more.

She waves the bottle off, and bends her head back down to her BlackBerry, typing feverishly.

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Partner

Saltwood just shakes his head.

“She worries too much,” he says to himself.

Two days later comes a jolt of reality for Saltwood in the form of a phone call from his CIO.

“We’ve got a breach. Doesn’t look too extensive but we’re moving to identify any lost data and isolate the problem,” the CIO says.

“Alright, keep me posted if you think it’s going to get uglier. I especially want to know if any customer data gets compromised,” Saltwood says.

“Roger, Wilco,” says the CIO.

It’s uglier than either Saltwood or his CIO could possibly know.

What’s hit Sweet Life is a cyber worm that goes by the name of “Purple Moray.” The name of the worm reveals its intent.

The worm carries a payload that is designed to search out and destroy — just like its ravenous sea eel namesake — programmable logic computers that control machine processes, the very thing that Sweet Life just purchased as part of its $15 million manufacturing upgrade.

Purple Moray is also equipped with a rootkit component, making its passage through Sweet Life’s information technology systems virtually impossible to detect. Try as they might, Sweet Life’s IT team feels like it is not seeing the whole picture.

Sweet Life’s CIO picks up the phone and calls a forensics team he knows in Rochester.

“Yep,” says the CEO of the forensics team when he picks up the phone. He’s eating potato chips as he talks.

“Yeah, hi Mark,” says the CIO, who has known the forensics CEO since high school.

“Whatcha’ got?” Mark says, crunching a chip.

“Are you eating?” the CIO says agitatedly.

“I’m hungry. What is it?” Mark says.

The CIO shakes off his irritation.

“We need you to come down here. We’ve had a breach and we’re not sure of the extent of it,” the CIO says.

“We’ll be there this afternoon.”

Part Two: Gut-Wrenching Pain

The CIO initially fails to tell Anne Margate what’s going on. Sweet Life is a bit of an old boy’s club — though all the top brass is under 40 — and Anne is not a member of the club.

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But she makes a point of finding out what’s going on within the company regardless. It’s when the Rochester forensics team shows up that she gets wind of what’s happened.

“When were you going to tell me about this?” she asks the CIO.

“I … ,” he manages to get out before she cuts him off.

“We need to tell our insurance broker,” she says. “I’ll send you an invite.”

“Which is more than you did for me,” she says to herself under her breath as she walks away.

“OK to summarize,” the broker says on the call, “we need a full list of any customers affected, then move to notify those customers. And keep the forensic work going.”

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“I’ll let the cyber policy carrier and the crime policy carrier know that we might have a claim coming,” the broker says.

The next day the chief of operations comes into work to find that Sweet Life’s spanking new manufacturing system is down, all the way down.

“All the computers are dead, boss,” says one of the line foremen.

Anne Margate, who is now fully engaged in the recovery attempt, barges into the company lunch room.

There she finds Mark, the forensics guy, and two of his teammates settling down to a lunch of pepperoni pizza and a very large meatball sub.

“What’s going on?” she says.

“We’re having lunch,” Mark says.

“I know that, I mean with our manufacturing process,” she says.

Mark pauses to wipe some red sauce off of his chin.

“You’re, who again?” he says.

“I’m the risk manager,” she says, trying to control her anger.

“Oh,” he says. “What’s happened is that your operations have been attacked by a cyber worm. It’s called Purple Moray. It’s disabled the programmable logic computers that control your machine processes,” he says.

“Are they merely disabled or destroyed?” she says.

“We’re getting to that,” says Mark. “As soon as we finish lunch.”

Sweet Life’s broker, exercising an abundance of caution, contacts the company’s property carrier to notify it that Sweet Life may have a claim against this policy as well.

“It looks like the damages are far more extensive than we thought,” Anne Margate says on a call with Saltwood and the company’s property underwriters.

After she gets off the phone with her property underwriters, Anne Margate has the sickening feeling that in the event of the damages caused by a computer worm of this nature, her cyber, crime and property policies might not be all that well aligned.

Part Three: All Gone

“Can anybody in this company tell me what’s going on with this Purple Moray worm?” Josh Saltwood thunders into the phone from his vacation home in the Hamptons.

“All we’ve been able to do is identify it, we can’t stop it,” says the exhausted CIO.

Sweet Life’s situation is weakening day by day.

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In addition to disabling or damaging key pieces of manufacturing equipment, the worm, through a second payload, did access and steal customer data; much more data than the company’s IT department initially understood to be taken.

The company has to inform customers, including the largest natural foods retailer in the country, that although it thought it hadn’t lost their data, it turns out they had.

“We know we told you a week ago that your information was OK, but it’s not OK,” the CIO and Margate tell the retailer on yet another painful call.

“This thing is like some kind of insatiable beast,” says Mark, the forensics guy, as he sits at an in-house Sweet Life computer, an open bag of peppermint bark on the desk.

“You want some bark?” he says to Margate, who is sitting beside him trying to learn as much as she can about cyber hack forensics.

“No thanks,” she says.

“I’ve never seen anything like this,” says Mark.

Over time, the forensics team, working in congress with Sweet Life’s IT team, is able to isolate the Purple Moray malware and remediate some of the damage done to the company’s computer-controlled manufacturing system.

Anne Margate, who worries about everything, finds that her concerns about her insurance policies were somewhat unfounded.

The cyber, crime and property policies all respond, although not to the degree that every loss is covered.

The company’s property coverage was inadequate to cover all of the damage done to the company’s new manufacturing system. The uninsured loss there is more than $5 million.

Sweet Life is facing a daunting task as it deals with a bruised image in the marketplace and strained relationships with its once loyal customers.

Now it also has to improve its cyber security and convince its insurers that it is a good risk going forward. When Josh Saltwood founded Sweet Life, he was one of three licensed retailers selling Kombucha. When Purple Moray struck, there were more than two dozen U.S.-based producers. The burgeoning coconut water market reflects a similar reality.

As Sweet Life tries to claw back to some semblance of success, it faces an initial market share loss of some $10 million annually, and there is no policy that can insure that.

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Risk & Insurance® partnered with FM Global to produce this scenario. Below are FM Global’s recommendations on how to prevent the losses presented in the scenario. This perspective is not an editorial opinion of Risk & Insurance®.

While one could argue whether cyber risk is still “emerging,” it’s the new reality, and should be dealt with like any other hazard. So, let’s examine this scenario using a traditional risk management approach. Although cyber is a relatively new exposure, traditional risk management concepts apply: risk identification, assessment and mitigation.

Essentially, any organization is subject to a cyber attack, and it’s not a matter of if, but when it happens. In this case, Sweet Life had just upgraded its processing and shipping system, when a data breach occurred. How the breach actually occurred is not clear, but we do know that it did cause some major damage to the industrial system control computers. Serious business interruption ensued, which had a deleterious affect on the company’s supply chain and market share.

Just how aware was Sweet Life that its IT systems were at risk? Did Anne Margate, the chief risk officer, fully understand the potential exposure? Had she and the chief information officer had any discussions about business risk impact if the systems were compromised? Today’s risk manager has to think well beyond insurance procurement. In this new digital era, the CIO becomes a new and important ally in managing risk.

Potential questions to ask:

  • To what extent are your business operations tied to computers, and how reliant are you on these systems to keep your operations running? Do you have a back up plan?
  • How secure is your network? How resilient are your email spam filters and malware protection devices?
  • Have employees received proper network security training?
  • Are measures in place to keep potential intruders from gaining access to your network—internally and externally?

Some pre-emptive actions to consider:

  • Determine what information security standard applies to your industry and base your cybersecurity framework on standardized practices.
  • Identify and classify data based on business criticality, as well as sensitivity/confidentiality of data.
  • Identify critical assets and physical/logical network access points at your facility and determine how access is controlled. Prioritize improvement activities.
  • Create and maintain a documented incident response team to respond to cyber events. The plan should be part of a holistic risk management program.
  • Test the plan. Tabletop simulation exercises can test the plan and identify restoration timeframes.

Multiple policies, various coverage: In terms of insurance coverage, cyber losses tend to involve multiple carriers. In this case, Sweet Life had three separate policies for cyber, crime and property. Unfortunately, how these policies would respond in the event of a cyber attack had never been fully vetted. As is the case with any insurance coverage, the time to learn about what is covered is an exercise best conducted before the loss actually occurs. If you have multiple carriers, be sure that you and your broker meet with them in advance to understand how the policies will respond and iron out any discrepancies.




Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]
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From Drones to Defects: Planning for Construction’s Top Challenges

Construction buyers must be more vigilant about protecting projects before breaking ground.
By: | November 2, 2016 • 6 min read

The construction industry is firing on all cylinders. New projects spring up every day, but not all go according to plan.

Three out of every four construction projects fail to finish on time. Every party involved – owners, designers, contractors and subcontractors – expects perfection, with the final product delivered on schedule and on budget. Those expectations leave little room for uncertainty, so even a small hiccup can have ripple effects that disrupt a project for everyone.

As outlined in a recent report by McGraw Hill Construction “a lack of thoroughness of preconstruction planning, estimating and scheduling” is a leading cause of uncertainty.1

“There’s often a big disconnect on the front end of project planning,” said Doug Cauti, Senior Vice President, National Insurance, Chief Underwriting Officer, Construction, Liberty Mutual.

Proactive risk mitigation is also important to manage emerging challenges facing the construction industry ‒ drone regulations are evolving, commercial auto losses are rising, and so is uncertainty about which party might be held responsible for a construction defect. Without the proper planning, these issues can easily be overlooked and result in major losses and project disruption.

Liberty Mutual’s Doug Cauti discusses key challenges facing the construction market.

“Key risk management strategies have to be aligned among all parties from the beginning to minimize these uncertainties.”

Before construction begins, there are actions that project owners, designers and contractors can take to address these challenges and better protect their projects and businesses:

Drone Dangers

Drones can be useful tools on construction sites, providing an extra set of “eyes” for large commercial projects or tall buildings. They provide a real time aerial glimpse of works in progress, giving supervisors an added perspective to spot potential flaws, assess safety hazards, and check on workers. But many challenges remain in the safe — and legal — operation of drones.

Liberty Mutual’s interactive infographic highlights risks related to managing drones at construction sites, and also includes a pre-planning drone use guide and a pre-flight checklist that includes making sure to review the latest drone regulations.

How construction buyers can manage the insurance implications of using drones in their operations.

General contractors and project owners need to stay up to speed on FAA regulations, which changed in August, 2016.

“For one thing, operators need to have the drone in sight at all times,” Cauti said.

“And you need to make sure any operators are appropriately licensed and trained, that the drones are regularly maintained, and that the machines don’t impede on others’ safety and privacy.”

Clear flight paths and work zone boundaries can minimize the risk of a drone striking another property, or worse, a person. Operators should also know how to conduct an emergency landing if the drone suddenly loses power. It’s also important to consider how you are going to manage and use drone footage. Advertising liability can be a concern if third party images are captured and released. Know who is in charge of the data collected, who has access to it, and how you are going to protect it.

“If the contractor owns the drone, it takes on more liability. The contractor should review its insurance policies to make sure the coverage will respond to that risk,” Cauti said.

SponsoredContent_LM“As an insurance carrier, we may have a role to play in those proactive discussions. We are uniquely positioned to help project stakeholders see their risks and work to minimize them.”

— Doug Cauti, Senior Vice President, National Insurance, Chief Underwriting Officer, Construction, Liberty Mutual Insurance

Contractors and project owners can protect themselves through enhancements to their commercial general liability policies or through separate aviation policies, he said.

If a general contractor leases a drone through a third party, “they bear the responsibility of making sure the vendor is fully insured,” Cauti said. Vendors should have “non-owned” aviation coverage with limits suitable to handle the size of the risk.

Fleet Safety

Commercial auto losses challenge many business sectors, and construction is no exception.

More vehicles on the road and more miles driven, combined with fewer experienced commercial drivers, are driving up the frequency of accidents. On construction sites in particular, congestion created by closed roads, piles of materials and roving heavy machinery may lead to work zone accidents. Rising medical costs and repair and replacement costs of high-tech vehicles increase claim severity.

“I don’t see this trend reversing any time soon,” Cauti said.

Mitigating commercial auto losses begins with driver hiring practices.

“Pay attention to who you put behind the wheel,” Cauti said.

“Motor vehicle reports (MVRs) and driving history can alert employers to previous accidents or tickets. But there also needs to be regular communication with the drivers you do hire, and clear protocols in place that define expectations of how the job should be performed,” he added.

Ways construction buyers can manage rising commercial auto loss costs and better protect their fleets and employees.

Those protocols include requiring the use of seat belts, prohibiting cell phone use while behind the wheel, mandating scheduled breaks, outlining maintenance procedures, defining if company vehicles can be used for personal use, and establishing crash report procedures that delineate who to contact and what information to collect in the event of an accident.

Contractors can also monitor fleet performance through telematics systems. These on-board systems can track unsafe driving behaviors like hard braking, sharp turns, and speeding. But the data is only as good as the person analyzing it. Contractors and project owners should partner with an insurer who can use fleet telematics data effectively to pinpoint common causes of accidents and recommend specific risk mitigation strategies.

Liberty Mutual’s Managing Vital Driving Performance is one tool that leverages insureds existing telematics data to identify unsafe driving behaviors and accident patterns.

“Our risk control consultants can drill deeper into the data and interview drivers to identify patterns and find out the root causes of bad driving behaviors in the first place,” Cauti said.

For example, a post-accident interview with a driver could reveal that he had been skipping breaks and spending too many hours on the road, leading to fatigue and inattentive driving.

Identifying those connections enables consultants to make specific risk mitigation recommendations, such as adjusting drivers’ schedules and workloads to reduce overtime, or adjusting dispatch protocols so employers can ensure drivers aren’t working too many shifts in a short period of time.

Construction Defects

Another uncertainty project owners, designers and contractors have to face is how insurance coverage will apply should a project end up in a dispute. “The struggle is around the definition of ‘faulty workmanship’ and who is responsible for the defect. Is it in the design or the build?” Cauti said.

“There can be a lot of finger pointing involved. This reinforces the need for contractors to have a systematic quality assurance (QA) program that adheres to best practices, and for every party to have a role in it.”

Elements of a QA program could include testing of construction materials, conducting regular walk-throughs and obtaining approvals from the owner at key phases, and final sign-off by the owner at the project’s completion.

How construction defects and the current legal climate are affecting projects.

Construction defect claims can affect a business’s reputation, profits, and ability to maintain insurance coverage. That’s why it’s so important to be vigilant about avoiding construction defects, whether you’re a designer, developer, owner or general contractor.

Ultimately, though, these risks should be addressed before ground is broken. Discussing these challenges and collaborating on loss prevention strategies up front reduces the likelihood that any “hiccups” will throw off project timelines or increase costs for the various stakeholders.

Pre-planning discussions also offer the opportunity for these parties to take advantage of carrier partners’ risk control services.

“As an insurance carrier, we may have a role to play in those proactive discussions,” Cauti said.

“We are uniquely positioned to help project stakeholders see their risks and work to minimize them.”

To learn more about Liberty Mutual’s solutions for the construction industry, visit https://business.libertymutualgroup.com/business-insurance/industries/construction-insurance-coverage.

[1] Managing Uncertainty and Expectations in Building Design and Construction SmartMarket Report

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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 Liberty Mutual Insurance. The editorial staff of Risk & Insurance had no role in its preparation.








Liberty Mutual Insurance offers a wide range of insurance products and services, including general liability, property, commercial automobile, excess casualty, workers compensation and group benefits.
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