Utilizing Resources to Effectively Reduce Accident Frequency and Related Costs for an Owner Controlled Insurance Program (OCIP)
Controlled Insurance Programs or "Wrap Ups" have been around for decades. The process essentially involves the purchase of insurance on a large construction project by one entity. When the owner or financier of the project purchases the insurance, the program is referred to as an Owner Controlled Insurance Program (OCIP). When the prime contractor buys the insurance, it is referred to as a Contractor Controlled Insurance Program (CCIP). In most cases, the entity will only purchase Worker's Compensation and General Liability insurance for all, or most, of the contractors working on site. This particular paper will refer to work on an OCIP that was completed in Baltimore, Maryland. More details on that to follow.
Exceptions for contractors enrolling into the CIP are generally based on the exposure created by the contractor's work, and/or the amount of payroll that will be generated. For example, asbestos abatement or demolition contractors are generally not enrolled in Wrap Ups due to the danger involved in the work. Contractors that will only perform a small amount of work are generally excluded because it's generally not worth the effort and costs of enrolling them.
The advantages of a CIP are the cost savings for the controlling entity because they can purchase higher insurance limits for less money by buying "in bulk". The disadvantage lies in the increased risk that is taken on by the purchasing entity, particularly with regard to worker's compensation insurance.
The best way to control this risk is to implement an effective safety program to prevent incidents and aggressive claims management to limit loss from any claims that arise for the project.
Again, for the purposes of this paper, references will be made to an OCIP. In this case, the Owner is a Caesar's Entertainment, large gaming company with locations throughout the country. The insurance carrier for the Worker's Compensation was Zurich NA. The Construction Manager was Whiting-Turner, a large firm headquartered in Baltimore. The insurance broker was Conner Strong & Buckelew out of Marlton NJ and their affiliated firm, JA Montgomery Risk Control. CR Solutions was retained by Conner Strong & Buckelew to administer the OCIP.
