What is the premium basis for OCIPs? Is it similar to regular insurance policies? Ryu, Los Angeles, CA
The majority of wrap-ups, like the majority of contractors’ policies, are given an adjustable rate which is applied to either the payroll or construction value exposure. As we outlined in our March 2012 article, Pitfalls of Wrap-Up Rating Based on Construction Value, regardless of which exposure basis is ultimately chosen, for a wrap-up that includes both WC and GL, the underwriter will begin his/her evaluation by utilizing the trade breakdown provided in the marketing submission. In other words, the initial rate will be derived from the payroll exposure but may be later converted to a rate applied to construction value.