We spend a lot of time engaging with our clients to learn more about their coverage demands and how we can help deliver more suitable solutions. David Price, SSL Endeavour Director of Specialty highlights where subcontractors need to be wary and unravels some of the complexities.
Fuelled by public spending on infrastructure projects in both the transportation and manufacturing sectors, engineering and construction spend in North America is expected to grow in 2019 by at least 3% year-on-year.
While there are many opportunities for large general contractors to win substantial project work on large infrastructure projects, hundreds of subcontractors will exist in a project’s supply chain to help bring a contract to completion and require bespoke coverage solutions.
What many don’t realise is that, while subcontractors and other project partners may have smaller balance sheets compared to the global contractor managing the build, their liability and deductible is often wrapped in the main insurance programmes controlled by the larger general contractor.
So, what does a smaller subcontractor need to know about construction wrap programmes?
- These programmes can be complex. Wrap programmes very often involve multiple parties, including construction contractors, developers, joint venture partners and others connected to the project. Any one of these groups could put smaller local subcontractors at risk due to the size of the deductible on the main programme
- Deductibles in wrap programmes can be much bigger than a small subcontractor might be used to. In some cases these deductibles can run as much as US$250,000 depending on the size and location of the project and general contractors can stipulate that all subcontractors are responsible for the main wrap deductible if they are at fault in an incident. Subcontractors involved with wraps across multiple infrastructure projects can quickly be priced out by such requirements.
However, the good news for subcontractors and other project partners is that construction risks are a mainstay of the London Market and solutions providing much-needed flexibility to make coverage affordable are available.
At SSL Endeavour, we are constantly listening to our clients so we can deliver products that meet the demands of subcontractors working on large infrastructure projects, such as new freeways / motorways, stadiums and commercial skyscrapers.
We have developed buyback programmes specifically targeted at subcontractors which reduce deductibles to more realistic levels – bringing a US$100,000 deductible down to US$5,000 for instance, while still protecting their income should claims arise.
This solution also allows small subcontractors to work on big projects without taking on undue financial risks to themselves.
To learn more about this offering and how it differentiates to other solutions, get in touch with our team.
A more comprehensive version of this article was published in leading insurance magazine Insurance Day [subscription only]