The Importance of Risk Transfer: Is your company flying blind into a perfect storm that could destroy your profitability for years to come?

As you are aware, the ability for a construction company to maximize profitability while minimizing risk has never been more important than in today’s challenging and ultra-competitive economic climate. If you’re like most firms who hire subcontractors, proper Risk Transfer, among other things,  includes obtaining a signed Hold-Harmless & Indemnification Agreement as well as a Certificate of Insurance naming you as an Additional Insured. 

In the event of a negligent act by your subcontractor, your firm should be in a position to successfully Transfer Risk back to your subcontractor with the assumption that their insurance carrier will provide for your defense and pay the claim. Sounds simple? Sounds like what you’re doing already? Think again …

FACT: Construction accidents rise despite downturn in construction activity. Even as construction activity has slowed throughout the New York tristate area, the Bloomberg administration reports the number of accidents and on-the-job injuries have climbed sharply. The number of construction accidents rose by 72 percent in this fiscal year compared to last. The number of injuries went up by 40 percent. 

FACT: It takes only one uncovered $1 million-plus claim to destroy profitability for the next four years. Your subcontractor’s employee fell from a ladder on your jobsite and is gravely injured.  Despite a signed hold-harmless and Certificate of Insurance from your subcontractor, the subs General Liability Carrier has an exclusion for Contractual Liability or some other exclusion or warranty resulting in their denial of defense for the claim.  Your General Liability may respond to the claim but your future insurance costs skyrocket! This leaves your firm more susceptible to potentially devastating uncovered losses as well as damage to your own firm’s loss experience and insurance costs, all resulting in a significant impact to your firm’s profitability and sustainability.

FACT: Subcontractors’ insurance carriers are providing more capacity but less coverage. Presently, there are a multitude of insurance carriers providing General Liability insurance coverage to subcontractors throughout the tri-state area.  On the surface, this would appear to be good news!  The problem is that many of these insurance carriers provide coverage to your subs which have exclusions and warranted forms that in actuality provide little or no coverage for catastrophic claims (or even smaller claims), including Labor Law 240/241, contractual liability, residential exclusions and many others. It has been estimated that approximately half of the subcontractors operating in the metropolitan New York area have some form of exclusion or warranted insurance policy.   

SO HOW DO YOU, THE GC OR DEVELOPER PROTECT YOURSELF AND IMPROVE YOUR RISK TRANSFER PROTOCOL?

SOLUTION

The BNC Subshield™ is a state of the art proprietary certificate tracking and insurance verification system designed specifically for General Contractors, Developers and Real Estate Owners & Managers. Our advanced “Vendor Qualification” software system combined with our construction insurance and risk management experience provides clients with a service designed to significantly reduce your exposure to third party risk and help your firm properly vet your subcontractors.

Here are some valuable highlights of the BNC Subshield™ program: 

  • Provides valuable up-to-date information accessible to your firm via reports sent directly to your email.
  • Identifies subcontractors with deficient coverage based on and compared with your specific contract requirements.
  • Reduces Administrative frictional costs – What are the staff hours and administrative costs to your firm managing subcontractors?
  • Reduces indirect costs –What would be the impact of $1million Labor law claim cost if a sub does not have proper coverage in place to protect you?
  • Reduces Direct Costs with Insurance Carriers – BNC SubShield™ is recognized by many of our Insurance Carriers partners

The BNC Subshield™ is a low investment, high return solution for reducing exposure to third party claims. Not only does it reduce the man-hours spent by your own staff, who are typically not experienced in insurance, but it increases the efficiency, accuracy and effectiveness of your overall risk transfer program, resulting in reduced risk management costs and increased profits. 

While certificates of insurance don’t confer coverage (only policies do), a highly effective and streamlined system for reviewing, tracking and reporting visible deficiencies in certificates of insurance is a must for any effective risk transfer protocol.

Contact us today to find out more about the BNC Subshield™, one of the most powerful risk transfer and certificate tracking systems in the industry. 

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