GENERAL LIABILITY ROUND-UP

Beverly Hill, Balfour Beatty Construction

Janet Kerr, Boston Properties

David DeLaRue, Willis Construction

September 16, 2014

Locating the herd?

General Liability Round-up | 2

OCIPintroduced to construction

1940 1995

Owners begin looking at using

CIPs for Residential Risk

1998

Standard market begins

restricting coverage for

home builders

Excess & Surplus Lines

senses an opportunity and begins writing Residential GL

Only CIPs

Contractors begin using WC/GL CIPs

Workers compensation rates begin to soften putting pressure on WC/GL CIPs

2000 2008

Residential GL only Expands as

construction explodes

Residential Market Slows. E&S looks to commercial

market

2010

Contractor CIPs gain momentum and owners see

more CCIP offerings

Contractors hate the CIP and anyone who

supports them.

Rolling GL Only CIPs appear

and contractors are using CCIPs more on projects

of all sizes.

GL Only on commercial

projects becomes more

competitive

2012 to Present

Owners begin to consider GL Only CIPs on larger commercial

projects.

Conventional Owner CIP1940 to Present

Contractor CIP1998 to Present

Diverging & Converging Interests

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• Cost management• Claim Defense• Improved Coverage• Successful Project

General Contractor

• Contractor Risk – Contractor Coverage

• Practice Policy Integration• Subcontractor Exposure• Owner relationship• Owner CIP limitations• Coverage• Condo Conversion

Owner

• Contingent or vicarious liability (Named insured?)

• Lender requirements• General contractor relationship• CCIP Transparency• Coverage

WC/GL vs. GL Only – Decision Drivers

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WC/GL CIP GL Only CIP Admitted Carriers

Deductible

Minimum Retention usually begins at $250K

Collateral requirements

Better control over workers’ compensation (WC) claims.

Reduces exposure for WC subrogation

Carrier safety resources

Standard ISO forms with wrap-up modifications

Reliance on broker administrator – Carriers will consider broker experience in underwriting

Limited appetite for residential risk

Project size limitations

Multiple ownership interests complicates the placement

Excess & Surplus (E&S) Lines

Deductible or Self-Insured Retention*

Low retention - $25K

No collateral requirements

No control of workers’ compensation claims except through agreement

WC subrogation exposure

No safety services

Coverage form flexibility

Can mandate use of third party program administration in addition to broker

Market is open to residential risk

Greater flexibility on project size

Good solution for JVs or multiple ownership interests

GL Only Market Summary

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Commercial Multi-Family (Apartments) Multi-Family (Condo)

Tier 1 Tier 1 Tier 1Gemini Gemini Houston Casualty

Westchester Westchester CatlinHouston Casualty Houston Casualty ARCH

Navigators Navigators NavigatorsARCH ARCHCatlin Catlin Tier 2

First MercuryTier 2 Tier 2 United Specialty

First Mercury First Mercury LexingtonLexington Lexington Lloyds of LondonIronshore Ironshore

United Specialty United Specialty

** Leading markets may vary depending upon geographical region

Ma

rke

t L

ea

de

rs*

* Leading the market in terms of pricing and coverage.

GL Market Summary

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Commercial Multi-Family (Apartments) Multi-Family (Condo)

- ISO CGL Form - ISO CGL Form - ISO CGL Form- ALAE Outside Limits - ALAE Outside Limits - ALAE INSIDE Limit- Exclusion J, K, & L Modified - Exclusion J, K, & L Modified - Exclusion K & L Modified- Damage to Project Excl. - Damage to Project Exclusion - Damage to Project Exclusion- Condo/Resi Exclusion - Condo/Resi Exclusion- Environmental Exclusions - Environmental Exclusions - Environmental Exclusions- Limited Professional CG 22 79 - Limited Professional CG 22 79 - Limited Professional CG 22 79- Extended Completed Ops - Extended Completed Ops - Extended Completed Ops- EIFS Coverage* - EIFS Coverage* - EIFS Coverage*

- Cross Suits Exclusion With Exception- Close of Escrow PCO Trigger Limited

Other Notes Other Notes Other Notes- No Frame Construction - Some Frame Limitation - Some Frame Limitation- No NY Wrap Coverage - No NY Wrap Coverage - No NY Wrap Coverage- Deductible Programs - Deductible Programs - Deductible/SIR Programs

- Third Party QA/QC Inspection Required

Co

vera

ge

No

tes

* EIFS process subject to underwriting. Market and coverage options further limited on wood frame construction projects.

Industry Trend to GL Only? Workers compensation rates continue to pressure WC/GL OCIP financials

Retail underwriters have limited interest but that may change

Continued erosion of contractual protections will drive many to project insurance

Continued erosion of subcontractor

Lenders are becoming more aware and drive projects into a CIP

Project delivery methods will rely on more CIP solutions (IPD & P3)

Owners will continue to explore GL only

Contractors continue to rely heavily on WC/GL CIP but use GL only on select projects

General Liability Round-up | 7

Recent GL Only Project Examples

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Cameron LNG Plant - $5Bn LNG Project in Louisiana DeKalb County – Rolling OCIP

Minnesota Vikings - $750M Stadium Project MGM National Harbor Hotel & Casino - $800M Hotel Casino

Questions & Answers

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