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Marsh India Insurance Brokers Pvt Ltd.
MANAGING CONSTRUCTION RISKS
SOLUTIONS FOR A COMPLEX INDUSTRY
Construction and renovation projects are often complex, capital intensive and deadline driven. The risk increases
when construction takes place near an active facility or congested area. Risks include construction accidents, design
and construction errors, interference with ongoing operations, and geological or pollution-related conditions that
manifest during construction or even long after project completion. In today’s climate, these risks are compounded by
changes in legislation, defining codes of practice and ever increasing demands on the performance of developers,
architects, engineers and contractors.
MARSH CAN HELP
RISK IDENTIFICATION
Physical damage to a project, and the ensuing
consequential loss, is perhaps the greatest risk faced
during the construction and erection of a project.
The first step is to understand all the risks associated
with a construction project, and then design an
appropriate risk management and insurance program.
Marsh’s dedicated team of experts will:
Marsh’s team delivers the requisite expertise at every
stage of a project’s life cycle – from the development
phase through to the construction, completion, and
operations of the project.
Our dedicated team designs all types of coverage,
including comprehensive “all risk” coverage – utilizing
individual project policies – and also “master or blanket”
construction risk programs. While individual
Construction All Risk (CAR) policies are effective for
single or very large projects, “master or blanket”
programs are designed to provide cost-effective
coverage for multiple project sites.
•• Conduct a comprehensive risk review, to identify and
quantify insurable risks and provide estimated
insurance costs.
•• Conduct a thorough analysis of key agreements,
contracts and project specifications as well as
evaluation of the insurable risks amongst the insured
parties.
•• Assess the availability of insurance and insurance
program options.
•• Design and negotiation of the insurance program,
for both CAR and individual project policies.
•• Design the claims and insurance administration
procedures.
YOUR CONSTRUCTION RISK
Construction risk insurance is intended to protect a project
against physical loss or damage to the property to be
erected or installed during its transportation to the project
site, while awaiting installation at the site, and during the
course of construction. This policy may also be extended
to cover ensuing consequential financial loss due to delay
in completion and third party liability.
Construction companies are often subjected to
increasing premiums, decreasing limits and
reducing options. As the leading broker in the
industry, Marsh’s market presence helps ensure
that our clients receive a cost effective insurance
program tailored to their needs.
Some of your key business issues may include:
•• Construction interruption risks/ crisis management
•• Professional liability
•• Design error
•• Cost of risk transfer
•• Transit and off -site storage
•• Terrorism
•• Contractor’s equipment
•• Third party liability
•• Delay in start-up insurance
•• Sub-contractor/Supplier default
•• Worker’s compensation cost
•• Workforce safety
•• Political risk
Allegations surrounding third party liabilities can
stretch across a long time span and include
‘long-tail’ exposures. The liabilities may arise
because of construction defects, methods used
leading to environmental contamination, as well
damage due to use of materials such as asbestos
and silica. We help companies obtain and
increase insurance recoveries, avoid costly
litigations and mitigate the financial effects of
mass tort and complex liabilities.
This includes loss of earnings, debt service
payments, fixed operational, and maintenance
expenses. A construction all risk policy is an
essential component of a construction project
risk management procedure. Recommended
coverage under a property policy is ‘all risk’ of
physical loss or damage, subjected only to the
standard market exclusions.
•• Environmental risk issues
and a host of other emerging issues considering the
rapidly changing global business environment.
2 • Managing Construction Risks
Subcontractor default presents a high level of
risk for any construction firm, especially in
difficult economic times. A struggling
subcontractor can have far-reaching financial
and performance consequences on construction
projects. Profit margins can be in jeopardy and a
defaulting subcontractor can adversely impact
relationships between the contracting parties if
the project is delayed. Mitigating the risk of
subcontractor default requires a thorough review
of subcontractor qualifications prior to awarding
the contract.
ADDITIONAL SERVICES
TOOLS TO DO THE JOB
In addition to our advisory, consulting, and placement
expertise, Marsh also offers the following value-added
services to help prevent losses and claims, including:
Marsh has a suite of services and solutions that we can
use for your benefit – from concept and risk identification
to insurance solutions.
•• A specialised Risk Consulting Practice to analyse projects
specific hazards and protection designs to customise
property loss control practices for the project, in addition
to consulting on the design of important fire suppression
systems.
Risk focus is a cost effective risk identification and
management tool that can be used in the initial planning
phase of a project and continued to completion, using
the project management team members and Marsh risk
specialists.
•• Forensic Accounting Claims Services (FACS) performed
by Marsh’s global infrastructure practice, providing
assessments of property damage and delayed opening
exposures for complex situations.
•• Dedicated claims advocacy specialists from loss
investigations and adjustments to catastrophe loss
responses.
We can work with your legal advisers to determine contract
clauses to ensure risks identified are appropriately
allocated and responsibilities and insurance requirements
detailed and checked.
Our experience and expertise will assist you in
understanding the range of insurance products and
solutions available and enable you to select those that
are appropriate for the risks you are exposed to.
Using our local and international targeted placement
strategies we can leverage the insurance market to obtain
insurance solutions that meet your needs and are cost
effective with insurers that are responsive.
Marsh • 3
For more information about how Marsh can help you manage risk in the Construction industry
please contact:
PRASHANSA DAGA
Practice Leader, Crisis & Casualty
+91 9833 883 300
[email protected]
PRANAV PATEL
Practice Leader, Risk Management
+91 9920 785 848
[email protected]
ANUP PRATAP SINGH
Practice Leader, Infrastructure,
Power and Mining
+91 9873 550 933
[email protected]
Marsh is one of the Marsh & McLennan Companies, together with Guy Carpenter, Mercer and Oliver Wyman. This document is not intended to be
taken as advice regarding any individual situation and should not be relied upon as such. The information contained herein is based on sources we
believe reliable, but we make no representation or warranty as to its accuracy. Marsh shall have no obligation to update this publication and shall
have no liability to you or any other party arising out of this publication or any matter contained herein. Any statements concerning actuarial, tax,
accounting or legal matters are based solely on our experience as insurance brokers and risk consultants and are not to be relied upon as actuarial,
tax, accounting or legal advice, for which you should consult your own professional advisors. Any modeling, analytics, or projections are subject to
inherent uncertainty, and the Marsh Analysis could be materially affected if any underlying assumptions, conditions, information, or factors are
inaccurate or incomplete or should change. Marsh makes no representation or warranty concerning the application of policy wording or the
financial condition or solvency of insurers or re-insurers. Marsh makes no assurances regarding the availability, cost, or terms of insurance
coverage. Although Marsh may provide advice and recommendations, all decisions regarding the amount, type or terms of coverage are the sole
responsibility of the insurance purchaser, who must decide on the specific coverage that is appropriate to its particular circumstances and financial
position.
Marsh India Insurance Brokers Pvt. Ltd. having corporate and the registered office at 1201-02, Tower 2, One Indiabulls Centre, Jupiter Mills
Compound, Senapati Bapat Marg, Elphinstone Road (W), Mumbai 400 013 is registered as composite broker with Insurance and Regulatory
Development Authority (IRDA) India. Its license no. is 120 and is valid from 03/03/2012 to 02/03/2015. CIN: U66010MH2002PTC138276.
Compliance IND – 20140526 -A