Construction Risk Blog

Finding a Chief Risk Officer for Your Connecticut Construction Firm

In my last post, I talked about finding the Hulk Hogan of insurance agents. To be more formal, you want a CRO or Chief Risk Officer. Since you probably don't have one on staff, you've got to find one and make him or her one of your Trusted Advisors.

Construction risk management has become a field unto itself. There is probably no more complicated area of insurance than insurance for contractors. The best practitioners are all specialists. It has become impossible to dabble in construction insurance. It's a full time job and you need the best.

It's a down economy, bid lists are long and all that "stimulus" money must have ended up in someone else's checkbook. So I'm not suggesting that you create a new position in your company just for insurance. I am suggesting that you outsource the risk management function to someone who has the skills and training to be your CRO. That is definitely not your typical insurance agent, mainly trained to sell you insurance policies.

Why is this so important? Think about the way you manage risk now. If you're like most of your peers, you've given "insurance buying" responsibilities to either someone on your finance staff or someone in the HR function. Even though their responsibility is limited to managing your insurance, they haven't even been trained to do that much less be your internal CRO. Do you really think that having a part time, overworked insurance buyer with no formal training is the best way to protect your business from catastrophic loss? I didn't think so.

You're probably thinking that you are paying your insurance agent to protect your business. Think again. First of all, most of them lack any level of training beyond what they learned to get a license. That's not very much when you consider half the curriculum was dedicated to homeowners and auto insurance and you can take the training in a week. If you want to see a deer in the headlights, ask your insurance agent if he is your CRO?

Insurance protects the most valuable asset you own, your business. And you need more than just insurance in today's world. You need a full complement of risk management services and a talented team of people who can execute a plan to mitigate and manage the risks faced by your business. Cheap insurance managed part time or a crack risk management team looking out for you like a bodyguard.

You decide.

New "Move Over" Law in Connecticut

As of October 2009, a new law is in force to protect emergency vehicles and their operators during emergencies on Connecticut's highways.

 AN ACT ESTABLISHING A "MOVE OVER" LAW IN CONNECTICUT (LINK)

 

SUMMARY: This act requires a motorist approaching one or more stationary emergency vehicles located on the travel lane, breakdown lane, or shoulder of a highway with three or more travel lanes to (1) immediately slow to a reasonable speed below the posted speed limit and (2) if traveling in the lane adjacent to the location of the emergency vehicle, move over one lane, unless this would be unreasonable or unsafe.

For these requirements to apply, the emergency vehicle must have flashing lights activated. Under the act, an "emergency vehicle" includes a vehicle:

1. operated by a member of an emergency medical service organization responding to an emergency call;

2. operated by a fire department or by an officer of the department responding to a fire or other emergency;

3. operated by a sworn member of the State Police or an organized local police department;

4. that is a maintenance vehicle; or

5. that is a licensed wrecker.

A subsequent act broadened the provision as it applies to police officers to include other types of law enforcement officers such as Department of Motor Vehicle (DMV) inspectors and appointed constables who perform criminal law enforcement duties (see BACKGROUND).

A violation of these requirements is an infraction, unless the violation results in the injury or death of the emergency vehicle operator, in which case the fines are a maximum of $2,500 and $10,000 respectively.

EFFECTIVE DATE: October 1, 2009

Thanks to our friends at CNA for the heads up on this.

Contractors: Change How You Buy Insurance

Remember when we were kids (I'm 54 years old) we were told, "No swimming until 45 minutes after eating". I can remember having nightmares of getting a stomach cramp and helplessly sinking to the bottom of the lake if I ever dared ignore this rule. All of us can probably think of any number of dumb rules or behaviors we've been subject to that have no basis in fact.

If you are the person responsible for buying insurance for your construction company, I'm sure you follow this rule: Going out to bid regularly will save me money. A corollary to this is: The broker who comes up with the cheapest price is the best and therefore has "earned" my business.

Both of these are stupid rules. There are a number of reasons for this:

Commercial insurance is a cyclical business. On average, premiums go steadily down for 5-10 years and then there is a correction for 2-3 years until the cycle repeats itself. Most agents and brokers look like heroes during the down cycles because they bring you lower premiums every year. Here's the truth: they had nothing to do with it! You would have saved the money no matter what they did!

Agents and brokers don't really want to save you money. That's right. Read that again. They don't want to save you money. Why? Because every time they save you money they make less money. This is a case of misaligned incentives. They only want to save you money one time - the first year they get your business because you reward them for coming up with the lowest price. I can show you lots of proof of this. Right now we're at the end of a soft market. If you read the insurance trade journals, everyone is praying for the market to harden. That means you suffer more because your premiums go up and your broker makes more which is always their goal.

Here's the inside baseball on this. Talk to any underwriter and the smart ones all tell the same story. Attention to safety and controlling claims determines the premium for your construction insurance. Find a Risk Advisor who will help you with jobsite safety and contractor's risk management and you will always pay less than your unsafe competitors. Don't reward someone for getting lucky enough to pick the stupidest underwriter when you go out to bid. Reward the company who rolls up their sleeves with you every day and improves safety and prevents and manages claims.

 

The Blind Side of Contractors Risk Management

What contractors can learn about risk from Lawrence Taylor

Last week the hit movie "Blind Side" opened. It chronicles the life of a disadvantaged young man from homelessness to college football stardom. Based on the book by Michael Lewis, it explains how the modern football offense evolved. One man caused this evolution. His name was Lawrence Taylor. If Lawrence Taylor hadn't set out to destroy quarterbacks, the left tackle on the offensive line would never have become the star character in a movie.lawrence taylor tackle

When Lawrence Taylor played linebacker for the New York Giants in the 1980's, he quickly became the most feared player on the field. Since most quarterbacks were right-handed, Taylor's coach Bill Parcells had him attack from the quarterback's left side or "blind side" as it became known. In Taylor's words, "It wasn't really called the blind side when I came into the league. It was called the right side. It became the blind side after I started knocking people's heads off."

Why am I writing a football story on a blog focused on business risk? Simple. Every business has a blind side, particularly construction companies. The blind side of a construction company is the place where all the unknown or unanticipated risks lie. Here are some examples:

• Construction companies sign contracts where risk is transferred upstream and downstream, from one party to another. The complexity of modern-day insurance language makes compliance a challenge even for the most diligent companies. What if your coverage doesn't respond as it should? That's your blind side.

• You've chosen an insurance company to protect your business. You think they're financially stable. You have a multimillion dollar claim. They file for bankruptcy shortly after you file your claim. That's your blind side.

• You think the $5 million umbrella you've always carried is plenty of coverage. Then a subcontractor's employee falls off a roof and becomes a quadriplegic. You're sued for $10 million because you didn't provide the proper safety on the jobsite. That's your blind side.

• In the clinic where your injured workers go for treatment, the doctor doesn't understand Return to Work. You have three claims in one year that end up costing much more than they should. As a result, your experience mod goes to 1.25. You then lose a $10 million dollar job that you couldn't bid because your mod was too high. That's your blind side.

The modern football offense evolved to where the left tackle became a critical position protecting the quarterback, the team's most valuable asset. Your business needs someone to protect its blind side as well. Have you chosen an insurance agent whose focus is solely on insurance or a Risk Advisor who can protect your blind side? Discover the difference by visiting www.constructionriskadvisors.com.