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HomeMy WebLinkAbout96.PPP OCIP Discussion_November 2015.pdf I Aon Construction Services Group • • � � , , • 1 � OCIP Status Update Orange • Sanitation November 2015 Gar,T.Ward Senior Vice Prei up 11 lrNewport Beach,CA 92660 aorrcom • Controlled Insurance Program Provides Solution Owner Controlled Insurance Program General Liability Excess Liability Builder's Risk Contractor's Pollution Liability • Control • • Cost Savings • Higher Limits of Insurance • Better Coverage Terms Dedicated to OCSD Projects • Coordinated Claims, Loss Control, Safety Facilitate Disadvantaged Business Enterprise (DBE) Participation • Elimination of Redundant Insurance Costs and Contractor Mark-Up • Public Relations Mn Construction Services Group I OCIP Status Update 100 Simulated District AM Proprietary B Confidential I November 2015 smpmrerei OCSD OCIP ANALYTICS Program Parameters • Original Program Term: May 15, 2008 - May 15, 2013 • Program Extension: May 15, 2013- December 31, 2015 Projects to be Extended Past December 31, 2015 • Project P1-100 • Project P1-101 • Project P2-89 OCIP Savings $3,500,000 t $3,000,000 $'3,004,854 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,0F�A 31 00 $0 ' i iir Worst Case Scenario October 1,2015 December 31,2017 (Projected) Add Construction Services Group I OCIP Status Update I OC Sanitation District AQV Pro crie�ry&Connaemiai I November 2015 2 Em,asa,am„m• OCIP Extension - Cash Flow Considerations / Options Extend OCIP to December 31, 2017 using current Program Parameters (Cost = $725,612) Extend OCIP to December 31, 2017 changing Deductible from $250K to $500K (Cost = $450,612) • Just one loss could eliminate the potential savings of increasing your deductible to $500K and the Option 2 deductible would apply to all future claims including construction defect claims LA Use another Insurance Company for Extension Coverage Viability Issues: • Insurers would not want to provide coverage for partially completed projects • • • • Insurers would need to charge for total construction costs of remaining projects, not"cost to complete' Shut down OCIP December 31, 2015 and instruct Contractors to provide their own insurance (Cost — $1,051,200) Potential Issues: Option • Possible Gaps in Coverage between OCIP and Contractor-provided insurance • Insurance limits will not be dedicated to OCSD project • Available Insurance limits may be exhausted by claims not associated with OCSD • No guarantee for Construction Defect Coverage through the 10-Year Statute of Limitations • No control in claims negotiations and settlements Acn Construction Services Gmup I OCIP Status Update 100 Sanitat*n Dettict AM- Pmpnetary&ConHdarbal I November2015 3 emp—R... Aon Recommendation Our recommendation would be to go with Option 1 as this option would provide the District with the most consistent and uniform coverage to protect all project stake holders. Add construction Services croup I OC1P shams Update I OC sanitation District AM- ProprieUry B Contitlenlial I November 2015 [mpowereerm¢