Wrap-Up Savings

In our spring issue, we discussed and analyzed wrap-up costs. This time around, we wanted to take a look at the big picture to see if in addition to the benefit of greater coverage, the wrap-up also provided the benefit of cost savings. In short, we wanted to see if a program’s insurance credits were consistently more than the cost of the wrap-up.

We analyzed the costs and insurance credits for wrap-up programs from six separate states.  Basing these numbers as a percentage of insurance costs, the graph above shows:

Controlled Insurance Program Credits (grey bars)

minus Controlled Insurance Program Costs (white bars)

equals the Average Controled Insurance Program Savings (green bars)

The Location Effect:

The good and the bad of high numbers

As our analysis indicated before, wrap-up costs are much higher in certain regions, such as New York. Corresponding with high wrap-up costs, insurance credits are also much higher in these regions for the same reasons, mainly the higher costs and greater frequency of claims. This creates more savings potential in these regions; however, it also creates more of a variable environment, where bad losses and/or low insurance credits can create a poor performing wrap-up program. Overall, wrap-up insurance programs save the sponsor money; however, the location of the project should be discussed and analyzed.