On February 2nd, 2015, Concrete Foundations Association (CFA) Executive Director, Jim Baty, announced Arthur J. Gallagher as the appointed broker for the newly formed CFA Insurance Program. Arthur J. Gallagher, the fourth largest insurance broker in the world, maintains two of the leading construction and captive practices in the industry.
CFA board members realized that one recurring issue for all members was that the costs associated with risk management was one of the top five expenses annually. Members’ bottom-line profits weigh heavily on the success of managing all elements of their Total Cost of Risk (TCOR) such as: premium, claims, safety, EMR, and contracts. Several years ago, CFA board members had the foresight to explore risk management options for members. They wanted to be able to give their members more—more opportunities to network, more platforms to share ideas with one another, more data on safety, more guidance on contractual risk and more options to address problematic issues relating to the daily operations of a construction company.
The Gallagher/CFA cultures sync well and create a natural partnership for the implementation of the insurance program. This foundation will offer a viable and competitive alternative to the industry standard insurance placements for all CFA members that participate in the Program and allow them to adequately manage their Total Cost of Risk (TCOR). The construction insurance market is ready for a fresh start. For so many years the industry handicapped companies from capitalizing and historically provided cyclical pricing.
TCOR takes into consideration all aspects of your business’ risk management program; Experience Modification Ratings, safety controls, establishing proven contract standards, effective return to work programs, the legal cost associated with contracts and claims, certificates of insurance, time management of an insurance program, training employees, contract reviews, and sub-contractor management. Impacting these cost drivers will help to make your company more cost effective, drive down total costs and over time, bear fruit and impact your pure premium.
The goal of the Insurance Program is to provide CFA members with the ability to standardize processes for claims, safety, coverage, contract management, and certificate of insurances. By focusing on the whole picture, this program will be better positioned to impact cost drivers than a run of the mill, off the shelf approach year in and year out.
In order to align the CFA Insurance Program right from the start the program will address TCOR head on. Kristen Long, Arthur J. Gallagher’s Midwest Regional Practice Leader will spearhead the action plan for the reduction in Total Cost of Risk which will focus on these three areas: Financial Discipline, Consolidation, and CFA member Growth Strategies.
- Financial Discipline - Managing the costs associated with risk is a critical step toward developing an optimal risk management program. A member of the Program can expect to see a decrease in internal costs as we increase purchasing leverage to reduce insurance costs, implement heightened risk management training, standardize procedures specific to the concrete foundation industry, enhance coverages, and provide coaching on indemnification agreements. The long-term goal of the CFA Program will stabilize members’ Total Cost of Risk.
- Consolidation – Analytics will allow the Program to benchmark information relating to injury types, frequency, severity, experience modifications, return to work costs, legal expense and PPO network saturation. This will eliminate redundancies and streamline the process. Combining data stored from three different sources will provide insight for program members not available in the standard market and provide insurance program members an advantage in the marketplace against competitors.
- Growth Strategies – Helping member’s grow their individual companies is valuable. Risk management plays a large role in a company’s success and ability to grow profitably. The CFA Insurance Program must provide its membership with that flexibility. Our job is to assist your individual companies to grow profitably and healthy by having an adaptive insurance program that plans for every uncertainty and to ensure nothing will stand in the way of growing each member’s business and the CFA Insurance Program. Providing surety, coverage that matches contracts, emerging risks, safety, and regulation all play a key role.
"The CFA Insurance Program with Gallagher is what we have been striving to achieve for several years," says Ed Sauter, Steering Commitee Member. "This will give our participating members the opportunity to have an impact on the future of the industry and their own insurance rates. Gallagher has the experience and clout in the industry to give us the program we want and need."
The CFA Insurance Program is the first step. Together, with the support of the CFA membership, the CFA is creating an industry specific program that is establishing a platform where all members can collaboratively share best practices and effectively impact a CFA member’s TCOR. Liz Schneckenburger of Arthur J. Gallagher has triggered the beginning phases of establishing the program by taking a 20 percent sample of the CFA membership as the initial members.
"The members of the association wanted “smart options”, options that could not only protect their businesses but also have the potential to impact their bottom line," says Schneckenburger. "CFA members are excited about the opportunity Gallagher is bringing to the table. Just like any table that needs to be set before being served, we are in the process of polishing the data and setting up the program."
The final program design will be presented at the CFA annual meeting on July 22nd. Both Long and Schneckenburger will be attending the meeting.
Ed. Note: Elizabeth Schneckenburger is an account executive with Arthur J. Gallagher & Co. She can be reached at Liz_Schneckenburger@ajg.com.