2015 Innovation Awards: XL Group P.L.C.Posted On: Mar. 1, 2015 12:00 AM CST
When it comes to insuring massive public-private construction projects, a lack of communication and insurance products that often exist independently of one another have been long-term headaches for those overseeing work and maintenance of public roadways, bridges and more.
Insurer XL Group P.L.C.'s North America construction team introduced P3 Plus last year to better manage the design, construction, operational and maintenance phases that accompany public infrastructure projects.
“For a lot of these public-private partnerships, there were individual coverages, such as professional liability and builders risk and primary coverages, but it wasn't all coming together as a total integrated approach,” said Michael Esposito, Atlanta-based vice president and executive underwriter at XL and a key developer of P3 Plus.
Referred to as a “one-stop shop” to insure private-public construction projects, P3 Plus, a winner of the 2015 Business Insurance Innovation Awards, is an enhanced version of XL's P3 program.
In P3 projects, private companies, including many contractors, contribute capital to public projects, build them, and recoup their investment by operating and maintaining the asset or infrastructure as a revenue source.
“One of the key components missing was the operations and maintenance” insurance, Mr. Esposito said. “XL is trying to solve risk management for our clients. We wanted them to have all the products they needed for all their insurance needs.”
The trouble with insuring large public construction projects often involves maintenance that emerges three to four years after their completion, he said.
P3 Plus ensures the original contractor performs the maintenance — all covered by the original insurance, which translates into better budgeting and bidding for public projects.
“The contractor who performed the work will do the maintenance,” Mr. Esposito said. “They built it. They have the supplies. They know what they are working with.”
With P3 Plus, clients are assigned an experienced construction risk engineer who oversees and ensures better continuity of risk services.
Gary Kaplan, Chicago-based president of North American construction at XL, said the market wants price certainty.
“They have to know what the cost of insurance is up front,” he said. “If they get it wrong, it will have a huge impact on whether (the contractors) are profitable.”
“The key thing here is most insurance companies are constructed in silos,” Mr. Kaplan said. “People work on pieces of the puzzle and they hand it off when it is no longer construction.”
“The marketplace was incapable of coming up with this solution,” Mr. Kaplan added. “At XL, we worked together so there are no handoffs of projects. We thought this integrated approach was something we could work better with.”