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Risk Management 102: What You Cannot Find in a Textbook. • Andreea S. Brezeanu Senior Consultant, EY www.linkedin.com/in/abrezeanu/. 1. Construction related insurance. A contractor or subcontractor could individually purchase insurance or purchase a Controlled Insurance Program (CIP)

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• Andreea S. Brezeanu

  • Senior Consultant, EY
  • www.linkedin.com/in/abrezeanu/
1 construction related insurance
1. Construction related insurance
  • A contractor or subcontractor could individually purchase insurance or purchase a Controlled Insurance Program (CIP)
  • Generally, CIPs are designed for large construction projects with construction costs greater than $50m
  • There are two type of CIPs that can be purchased:
    • OCIP – Owner Controlled Insurance Program
    • CCIP – Contractor Controlled Insurance Program
  • Coverage provided under CIPs include CGL, WC and umbrella liability
  • Recommended to conduct a cost/benefit analysis
  • Advantages of CIPs
    • Peace of mind that all contractors and subcontractors have adequate policy limits
    • Centralized risk management through a single insurance program
    • Potential for profitability based on claims experience
  • Disadvantages of CIPs
    • Administrative burden
    • Long-tail claims exposure
    • Market risk if the insurance market hardens
2 coordination of benefits
2. Coordination of benefits
  • Practice to ensure that insurance claims are not paid multiple times when someone is insured under multiple insurance policies
  • One insurer is designated as the primary insurer, which means that claims are sent to that insurance company first
  • Traditionally, there is lost opportunity for recovery
  • This is a common practice in health insurance but it also applies to property and casualty insurance
  • EXAMPLE - Employee is involved in a car accident
3 difference in conditions dic difference in limits dil
3. Difference in Conditions (DIC) / Difference in Limits (DIL)
  • A DIC/DIL policy is designed to broaden coverage by providing additional limits of coverage for specific perils
  • Also an insurance policy to fill in the coverage gaps so there is uniform coverage regardless of location (i.e. local policies)
  • Most commonly found in global property portfolios or management liability policies
4 benchmarking
4. Benchmarking
  • Benchmarking is a way for a company to compare itself against its peers
  • There are various resources to assist in the benchmarking exercise
  • How benchmarking works
    • Determine industry/type of operations, revenue and employee size
    • Review limits, retentions and premium based on line of coverage
  • Benchmarking should be used as an indicator not as a final say
5 predictive modeling
5. Predictive Modeling
  • Companies are now utilizing data and creating predictive models for underwriting and claims purposes
  • In the case of Underwriting Predictive Modeling, models can be used to determine policy pricing
    • EXAMPLE – Telematics Auto Insurance
  • In the case of Claims Predictive Modeling, models can be used to assign and process claims
    • EXAMPLE – Slip and fall FNOL
6 legacy systems and new technology implementation
6. Legacy systems and new technology implementation
  • There is no denying technology plays an important role in our day-to-day lives and can be frustrating if not working properly
  • Companies realize they need to continuously improve how they interact with employees on the back-end and customers on the front-end
  • As you continue in the insurance industry, you will encounter a technology change and may even be involved in the process
  • Providing input to how technology should look or what functions is should have is an exciting opportunity
    • EXAMPLE – Claims software upgrade
summary
Summary
  • Construction related insurance
  • Coordination of benefits
  • Difference in Conditions (DIC) / Difference in Limits (DIL)
  • Benchmarking
  • Predictive Modeling
  • Legacy systems and new technology implementation
questions
Questions?
  • For additional information, please contact:
  • Andreea S. Brezeanu
  • 212-773-0657Andreea.Brezeanu@ey.com
  • www.linkedin.com/in/abrezeanu/