Consolidated Ontario resources ensure depth and specialized capacities for construction industry insurance and surety
Global insurance broker HUB International offers a broad array of products and expertise in Ontario, including construction industry surety products.
The company also monitors the industry, following trends and changing dynamics to advise and support its clients.
Scott Beitel, senior vice president – construction, says HUB has also recently consolidated its Ontario construction group. “By bringing all of our construction insurance professionals together into one co-ordinated practice group, we are able to better align our strategic approach to our client relationships and to their businesses.”
HUB International has gathered several experts in various industry aspects, who can respond to changing demands and trends. For example, there is an increasing need for environmental liability coverage. Linda Bousfield, account manager, real estate, construction and environmental, applies more than a decade of industry knowledge and experience in property/casualty and environmental pollution liability, including multi-national accounts, to address the increasing demands.
“We are seeing a trend in the purchasing of Contractor’s Pollution Liability (CPL) coverage, primarily driven by contractual requirements,” Bousfield said. “One of the results has been a dramatic price decrease for this coverage over the last five years.”
Bousfield says HUB, noticing the increased frequency in requests for CPL coverage, has proactively discussed this coverage, its benefits, costs, and triggers with clients. In some instances, she says, it is prudent for contractors to consider annual policies rather than for specific projects. “We will discuss the strategies of building the price into a contractor’s individual job costs.”
HUB is also committed to ensuring its clients are covered in other areas of their business. “Another item that we ensure contractors include in their coverage is difference in deductible coverage, which is typically an endorsement under the CGL (commercial general liability) policy.”
Bousfield says this is primarily beneficial for work done under an owner-controlled wrap up liability policy. In these cases, she says, the deductibles are often quite high and a sub-contractor may be responsible for the deductible cost in the event of a claim.
“This responsibility is often downloaded to them in their sub-contractor contracts, so contractors should be very aware of this potential exposure. Being forced to absorb a large deductible, $100,000 for example, could be detrimental to the financial health of a contractor.”
HUB focuses on helping clients understand their risks, with an emphasis on building industry sepcailty groups, including construction. “This allows our team to fully integrate into the sector for the ultimate benefit of our clients,” Beitel said.
He says this specific market presence allows HUB to benchmark pricing, coverage, and strategy to effectively leverage insurance relationships for the most competitive deals available.
“We understand that no two deals, or contractors, are exactly alike, so it is also important to be flexible in your approach to insurance coverage,” he said. “We offer a customized approach to building programs for our contractors that meet their risk and cost requirements.”
Beitel says despite the fact that surety has been around for a long time, people still don’t understand its complexities. He says surety is underwritten much differently than insurance and can be difficult to secure without proper guidance. “Surety is a more intimate process,” he says. “One of our first tasks is to educate our clients on the process involved and the time commitment.”
He says early involvement with clients is crucial because a surety bond broker can identify problems with contracts proactively and then act as a resource, consulting across a range of specialties.
“We have consultants we can call on for legal guidance, or for engineering advice,” says Beitel. “Many of us have specific industry experience including finance, accounting, underwriting and construction. As an office specialized in surety, we review multiple contracts daily so we have experience other firms may not.”
He says in many cases the onus and risk on projects is being pushed further down the line and while some contractors simply accept the risk without requiring a higher reward for that added liability, many others are not even aware the risk is there. “Often contractors are tied to risk or exposed contractually and they may have no idea.”
HUB reviews contracts regularly and tries to give clients advice early on in contract negotiations to respond more proactively to the terms and conditions and to give advice to clients on requests to take back to the prime contractor.
He says it is also important for contractors to understand the project’s true owner. “With a greater number of consortiums, joint ventures and new project owners, contractors need to have a clear understanding of who they are working for and the liabilities that are both laid out and implied.”
With industry changes including project bundling, Beitel says competition from foreign interests, decreased margins and more onerous contracts make it more challenging for contractors, and additional issues including cash flow management and hold-backs add additional pressure.
“There are also differences regionally depending on municipalities and various bond owners which are important to understand,” he said. “HUB’s breadth of experience and geographic range makes this easier.”
Beitel says that by “getting involved in a project early, HUB becomes a business partner both on the surety and non-surety side. We can help structure a contract with the end in mind and can assist with other aspects of the business to ensure a project succeeds.”
HUB, says Beitel, has invested heavily and proactively in technology, which serves to improve response times to clients and lowers overhead costs. “Our web-based programs, portal systems, and electronic distribution of key documentation has been well received by our clients.”
For more information about HUB International HKMB Limited, visit www.hubinternational.com.