New AIG Construction Specialty to Focus on Builder & Contractors

Responding to the lack of availability in the construction market, AIG Excess Casualty recently introduced a new excess casualty practice for builders and contractors, AIG Construction Specialty.

AIG Construction Specialty provides commercial umbrella liability insurance against events such as construction site catastrophes, explosions, collapses and completed operations incidents. In addition to an underwriting team that specializes in insuring construction risks, the practice has a dedicated construction claims unit to resolve claims quickly and cost-effectively.

“We’ve combined all of the business that we had in various business segments for excess liability and we’re putting it together for construction under one industry specialty,” Todd Germano, vice president of AIG Construction Specialty, said. “We had previously been handling it in different business units which wasn’t as easy for us to meet the needs of all the contractors and the insureds. Now we’re going to have one business unit handling all of the construction business, which we think will allow us to better serve them and be more consistent.

AIG’s focus comes at a crucial time, when capacity nationwide is constricting. Germano specifically mentioned the tight markets in New York and California.

In New York, labor law statutes §§240-241 impose strict liability on anyone who controls the worksite, Germano said. Therefore, if an employee of a contractor gets injured in the course of his work, and that meets the standards of those statues, there is no comparative negligence; it’s only a matter of assessing damages to that employee. “Those end up being general liability claims and work comp claims,” he said, “and they become much more frequent and they have become problematic for both primary and excess carriers.”

In California, a number of factors have led to the lack of capacity in the market. The building boom over the past 15 years or so in California led to increased competition among contractors, and subsequently, allegations of poor workmanship. Additionally, the Presley Homes decision, as it applied to the ISO Blanket Additional Insured form CG2010 11/85, meant “each and every subcontractor on a job is responsible for a percentage of the defense in the event of a suit, and in the absence of insurance of other participants, due to the failure of insurance carriers, or if other subcontractors had since gone out of business, the survivors or surviving insurers had to pick up the defense costs regardless of the insureds own percentage of the work or contribution to the loss,” according to Rudy Whitcomb, president of Whitcomb Insurance Services.

“Caps on malpractice punitive damage awards drew attorneys away from malpractice and class action malpractice work and drew them to a rapidly expanding field of Residential Construction Defect Litigation, and class actions particularly on condominium and town home projects,” Whitcomb added.

The practice will consider accounts with at least $10 million in revenues, and will consider all classes of construction business, including homebuilders, general contractors, specialty contractors, wrap-ups and project-specific risks. Standard policy limit is $25 million.

With an underwriting team of approximately 20 nationwide, AIG’s new unit will allow for a dedicated focus to the insuring of builders and contractors. “We’re working with the builders as well as other constituent parties in the industry to try and provide a product that is both viable and makes sense for us as well,” Germano added.

For more information, contact Todd Germano at 212-458-5849.

Topics California Excess Surplus Contractors Construction AIG