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WRAP-UP INSURANCE MEANS $1.1 MILLION REFUND FOR TURNPIKE COMMISSION

WRAP-UP INSURANCE MEANS $1.1 MILLION REFUND FOR TURNPIKE COMMISSION
 HARRISBURG, Pa., Feb. 7 /PRNewswire/ -- Work on the Amos K. Hutchinson Bypass and the Beaver Valley Expressway -- two major Turnpike projects in western Pennsylvania -- is nearing completion.
 Since the start of construction a little more than a year ago, the Pennsylvania Turnpike Commission and its contractors have achieved an enviable workers' compensation loss ratio of 10.8 percent, the commission said. (The loss ratio is determined by comparing the cost of workers' compensation claims to the cost of the insurance premium.) Because the commission is using a new approach to contractor/ construction insurance, known as "wrap-up insurance," their low loss ratio translates into big savings.
 On Jan. 21, M. Lawrence Emmett, attorney, and Thomas M. Schultz, attorney, of Insurance and Financial Counsel, consultants of the "wrap- up" program, presented a first-year refund check for nearly $1.2 million to the commission. According to Emmett, "This refund is directly attributable to the excellent safety record realized through the efforts of the commission's project managers, contractors, subcontractors and safety advisors.
 "Another $770,000 of first-year savings was realized through negotiated lower general liability rates and the elimination of contractor mark-up," said Emmett, who devised a wrap-up program specifically tailored for the Turnpike's needs. The negotiated savings may primarily be attributable to the designated brokers for this project: Hilb, Rogal and Hamilton Company, Inc., of Pittsburgh, and Frank B. Hall of Pennsylvania, Inc.
 Traditionally, contractors bidding on projects like the Beaver Valley Expressway or the Amos K. Hutchinson Bypass would include the costs of insurance in their bids. This method increases the amount of the bid, because the contractor not only includes his insurance costs but generally marks up those costs.
 With wrap-up insurance, also known as owner-controlled insurance, the owner of a construction project -- in this case, the Turnpike Commission -- provides major insurance coverage for contractors and subcontractors. In exchange, all contractors and subcontractors bidding on the project are required to exclude from their bids and change orders any calculations for the cost of insurance coverage.
 "There are 18 workers' compensation disability claims currently outstanding for the two construction projects and, all except perhaps five (four of which are in litigation), will be cleared up before winter ends," said Emmett.
 Emmett and Schultz said they plan to present a second check for $239,000 to the commission this month.
 The commission began using wrap-up insurance in June 1990. According to J.D. Fogarty, deputy executive director for finance, "The first-year wrap-up savings amounted to approximately $2 million. However, the full savings realized by this program will not be known until the completion of the Beaver Valley Expressway and Amos K. Hutchinson Bypass projects."
 "The $2 million saved equals almost 3 percent of the contract prices earned by contractors during the first 12 months," said Fogarty.
 Assuming the 3 percent ratio continues throughout the projects, the commission will eventually realize a savings of at least $8 million, according to Emmett's estimates.
 Also on hand for the $1.2 million check presentation were John T. Maskonick, division manager, and Mark S. Worhach, principal underwriter, of Argonaut Insurance Company; Alvin Rogal, chairman, Hilb, Rogal and Hamilton, Inc. of Pittsburgh; and William B. Churchman III, chairman, Frank B. Hall and Company of Pennsylvania, Inc.
 /delval/
 -0- 2/7/92
 /CONTACT: Michael S. Kennedy of the Pennsylvania Turnpike Commission, 717-939-9551/ CO: Pennsylvania Turnpike Commission ST: Pennsylvania IN: TRN SU:


CC-MK -- PH013 -- 7742 02/07/92 11:41 EST
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Publication:PR Newswire
Date:Feb 7, 1992
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