A strong safety and loss-control plan is the key that Judy Lindenmayer used to open the door to low self-insured retentions in a couple of wrap-up insurance programs covering FMR Corp. construction projects.

By detailing for a group of insurers the safety and loss controls that were planned for the sites, Ms. Lindenmayer attracted several wrap-up insurance bids with unusually low per-loss retentions and aggregate loss caps for the entire projects for Boston-based FMR, which is better known as Fidelity Investments.

"Attention to safety is the key to a wrap-up program," said Ms. Lindenmayer, vp-Fidelity insurance and risk management. "If you're not willing to put in the time and the expertise, don't do one."

Ms. Lindenmayer now is working with her broker, primary wrap-up insurer and Fidelity's various subsidiaries to fashion a rolling wrap-up program for future projects. As part of such a program, she plans to include a contractor insurance credit feature that helps construction project owners trim insurance costs substantially.

Fidelity currently is in the middle of two construction projects, each valued at about $100 million. The 427-room Seaport Hotel and Convention Center in Boston will be near the Boston World Trade Center, which Fidelity also owns. In Smithfield, R.I., Fidelity is putting up a two-building office campus.

Both are scheduled for completion next spring.

For the contractors at each site, Fidelity provides wrap-up insurance programs that cover the contractors' general liability, employee liability and workers compensation losses.

Under wrap-up programs, contractors typically obtain higher limits, broader protection and the benefit of lower workers comp experience modifiers as a result of the stringent safety programs the project owners typically implement.

Not unusual for wrap-up programs, Fidelity's programs have saved it millions of dollars in premiums.

The hotel wrap-up program saved Fidelity $2.5 million to $3 million in premiums, estimated Peter B. Burd, risk manager with primary responsibility for the Fidelity Capital group of companies and the member of Judy Lindenmayer's staff who spearheads the wrap-up programs. The Rhode Island project's wrap-up has saved Fidelity $700,000 to $800,000, he said.

Part of the difference between the savings in the two projects is the additional credit Fidelity earned from its insurers by requiring drug testing as a condition of employment at the hotel construction site. Rhode Island statutes prohibit drug testing except for cause or as part of an injury rehabilitation program, according to Don Hagerty, claims and loss control manager.

For each wrap-up program, Hartford Specialty Co. writes $2 million of primary limits per occurrence, with Fidelity subject to a $250,000 deductible. Ms. Lindenmayer would not reveal the total project loss aggregates but said that the loss aggregates are extremely low.

Hartford and units of American International Group Inc. and Chubb Corp. write excess coverage.

Without strong safety and loss control programs, a construction project owner likely will not reap substantial premium savings in a wrap-up program. In addition, insurers generally will subject project owners to high per-loss retentions and total project loss aggregates.

Ms. Lindenmayer obtained unusually low per-loss retentions and loss aggregates for Fidelity, according to her broker, Kevin A. White, executive vp-director of the construction services division of Aon Risk Services Inc. of Massachusetts in Boston.

Ms. Lindenmayer organized meetings with nine insurance companies to identify the exposures at the sites and show how they would be managed, Mr. White said.

As a result, "nine carriers came back with very aggressive plans," he said.

"It was Judy's ability to identify the exposures and show how they would manage the exposures that allowed the insurers to be more aggressive" in terms of requiring lower self-insured retentions on a per-loss basis and offering Fidelity a lower aggregate loss cap for the entire project.

While aggregate caps are common in wrap-up programs, "the trick that Fidelity pulled off is that Fidelity received a very good response on the aggregate from the insurance companies based on the presentation for controlling risks," Mr. White said.

And, not just one of the insurers came back with aggressive plans, Mr. White pointed out. Several did.

Ms. Lindenmayer's ability to demonstrate Fidelity's loss controls "gave them a loss aggregate that's lower than normal" under each program, according to Mr. White.

Fidelity drafted similar safety plans for both construction sites, and the general contractors are held responsible "to live within that plan," Mr. White said.

A safety representative from Aon, whose salary is partially paid by Fidelity, is onsite almost daily to make sure contractors comply.

Under the plans, which Fidelity reviews with a safety representative from each contractor, Fidelity often holds contractors to stricter safety standards than those required by the Occupational Safety and Health Administration.

For example, in addition to meeting OSHA's minimum fall-protection standards, Fidelity requires tethers on all workers above ground level so they will not drop even as far as the protective netting.

In the event of an accident or fire, Fidelity has developed a plan that is designed to help rescuers locate within minutes any worker who is unaccounted for, according to Mr. Hagerty.

An onsite medical care provider is not required by Fidelity's insurance company, but Fidelity nevertheless has hired Hingham, Mass.-based Occupational Health & Rehabilitation Inc. to provide onsite medical care as well as to conduct drug testing and to provide rehabilitation services to injured workers.

All workers also must complete an orientation program to familiarize them with the site so they know as soon as they begin work at the project where, for example, the medical area and the tool repair shop are.

Fidelity also regularly conducts "tool-box" meetings, which Mr. Hagerty called "tune-ups" for the workers on various pressing worksite issues.

For example, the meetings address issues such as the importance of keeping work areas orderly and free of debris.

"We've had really good experience on the hotel project so far," Mr. Burd said.

Contractors have filed a dozen claims, with two involving lost time, Ms. Lindenmayer said. And, one claim generated 95% of the losses, she noted.

No lost-time claims have been filed at the Rhode Island project, which is not as far along, according to Ms. Lindenmayer.

With the continual new construction and renovation projects that Fidelity undertakes, the company and Aon now are working on assembling a rolling wrap-up insurance program.

Such a program would provide Fidelity a basket of insurance limits that already would be in place whenever Fidelity began a construction project valued at $50 million or more.

"'We're trying not to re-create the wheel with every construction project we do," Ms. Lindenmayer said.

Ms. Lindenmayer is approaching Fidelity's current wrap-up insurers for the rolling wrap-up program.

Noting the amount of effort that is required to educate insurers about Fidelity's safety and loss control efforts at construction sites, Ms. Lindenmayer said, "Once you get over the learning curve, it's much more efficient to use the same folks."

Like the other wrap-up programs, the rolling wrap-up would include a contractor insurance credit feature. This program feature creates a somewhat laborious administrative process for Fidelity but pays off in lower insurance costs.

Under wrap-up programs with the credit feature, contractors detail in their bids what their insurance costs would have been if they had purchased the coverage themselves, but the contractors back out those costs from their bids.

Aon and Fidelity verify those costs with the contractors' brokers and insurance companies and adjust the insurance cost figures if necessary.

Fidelity then gives each contractor a credit equal to the cost of the insurance. The credit is based on the estimated man-hours that the contractor will devote to the project, Mr. Burd said.

If a contractor exceeds its estimated man-hours, Fidelity will deduct an additional insurance charge from the amount that it owes the contractor.

On smaller wrap-up programs, contractors include the cost of their insurance within their bids, and the insurance costs are backed out later.

The net effect is not identical. Although there is an administrative cost in identifying and monitoring credits, that plan is a more precise method for the project's owner to determine the project's insurance costs, Mr. White explained.

That is because with a credit feature, contractors have to submit proof of what their insurance costs would be if they purchased coverage themselves. The construction manager then reviews the accuracy of those figures and the contractor's calculations in determining its insurance costs.

Ms. Lindenmayer said that she has the support of senior management for a rolling wrap-up program.

That is a testament to her communications skills, Mr. White said.

Often, companies with many subsidiaries involved in construction projects in different jurisdictions are not willing to share limits for fear of not being adequately protected, he said.

"She's a very effective communicator," Mr. White said.