A standard OCIP feasibility study would compare the costs associated with the OCIP (fixed costs + variable costs, both at max and at loss pick) to the traditional costs of insurance carried by the general contractor and all of the trade contractors. It is best to start with projecting the trade contractors’ traditional costs. To do this, we refer to our proprietary software and underlying database. Consolidated Risk Solutions has been collecting wrap-up data for decades. Our database contains information on thousands of contractors working on various types of projects throughout the country.
We are able to sort and aggregate this data by 1. State, 2. Project Type, 3. Trade Contractor construction classification and/or Workers’ Compensation Code. We further narrow the results down by only reviewing information collected over the last three years then average the results. The outcome of using this method is the production of reliable payroll and insurance credit estimates derived from actual data. In a situation such as this, when the general contractor is known, it is likely the general contractor insurance credit can be positively identified by a combination of reviewing the trade budget breakdown for the “Liability Insurance” line item and a quick investigation into the portion of this amount that the general contractor needs to retain in order to provide the insurances that are not included in the OCIP.
Alternatively, if a CCIP has been proposed by the GC, then the most appropriate comparison would be to simply compare the cost of the CCIP to the cost of the OCIP. To ensure an accurate comparison, the GC should confirm whether the trade budget amounts provided include or exclude trade contractor insurance costs. If trade budget already excludes insurance costs then the comparison of the CCIP cost to the OCIP costs would be direct. If the insurance costs are included then further investigation of the insurance credits that the GC would expect to recoup versus the insurance credits projected using Consolidated Risk Solutions’ historical experience should be compared.
The above scenarios (OCIP Cost vs. Traditional Costs or OCIP Cost vs. CCIP Cost) are utilized to calculate savings, however once the program is implemented, savings can also be shown by comparing actual limited losses vs expected loss pick and/or maximum cost. CR Solutions can report this data in whatever format the client chooses. In addition, this reporting can be unique per each project’s needs.
CR Solutions can provide you with a feasibility evaluation for your company and share how you compare to the industry benchmarks we’ve seen out there. Book your consultation here.
