ConstructionMarchDETAIL

What is a Controlled Insurance Program (CIP)?

03/29/2023 Written by: Gary Semmer

A Controlled Insurance Program (CIP) is commonly known as a “wrap-up” insurance program and can take the form of an OCIP (owner sponsored) or CCIP (contactor sponsored).

Traditional OCIP’s & CCIP’s can include workers’ compensation, general liability and excess liability providing coverage for the owner, general contractor, and “on-site” enrolled subcontractors. A traditional OCIP or CCIP starts to make sense from a cost standpoint when the construction project exceeds $100M.

OCIP’s and CCIP’s can be provided for general liability and excess liability only and from a pricing standpoint they are typically cost effective at $30M and above. However, in certain states with construction defect issues, residential projects have been set up on OCIP’s starting at $10M based on general liability and excess liability market conditions.

The primary reasons that construction projects are set up on wrap-up programs are known as the 3 C’s:

  • Control: Owner or the general contractor has control over the program to provide centralized loss control/safety programs to assure all enrolled subcontractors comply. In addition, from a claims management there is one carrier handling claims to avoid “finger-pointing” between enrolled subcontractors.
  • Coverage: Wrap-up programs typically provide “broader” general liability and excess liability coverage with no residential or multi-family exclusions or restrictions including completed operations liability through the statute of repose in the state where the project resides and higher limits of liability than subcontractors carry through their traditional programs.
  • Cost: Wrap-up programs can provide “potential” cost savings over traditional programs as the enrolled contractors will deduct their insurance costs from their bids as coverage is being provided by the wrap-up program. We can provide a feasibility study up front to determine the pricing on the project.

Lastly, we need to select a wrap-up administrator to review the program and provide a wrap-up manual, provide bid credit calculations, enroll the subcontractors, and close out the program when the project is completed. We are aligned with several competent wrap-up administrators.

At AssuredPartners, we represent over 21,000 construction and surety clients nationwide with 200+ offices to serve you. Contact our experienced team of construction and surety professionals to help you achieve your lowest possible “Total Cost of Risk” (TCOR).