BENEFITS OF OCIP

• Cost Savings
• More Effective and Comprehensive Safety Program
• Improved Insurance Coverage
• Efficient Claims Management and Reduced Litigation
• Minority Contractor Participation

According to a report on OCIP from the Transportation Research Board, an OCIP can save the Project Owner up to 50% of the cost of traditional insurance, or from 1 to 3% of a project’s construction cost. The savings are generated by purchasing insurance in bulk for the entire project, avoiding duplicate insurance coverage and eliminating unnecessary charges associated to insurance costs, such as profit and overhead.

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Much of the potential savings from OCIP derives from a well-managed centralized safety program that results in fewer injuries. Although typically there is no single coordinated safety program under traditional insurance, OCIP can improve safety because one safety team can oversee all aspects of safety at a jobsite by implementing a centralized safety program covering all the operations of the contractor and the subcontractors. According to the State DOT officials who used OCIP for their transportation projects emphasized the importance of a centralized safety program as the basis for the success of their OCIP. Improved safety at a jobsite has the positive effect of reducing Workers Compensation and General Liability claims, thus producing cost savings for the Owner.

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Under traditional insurance, every contractor and subcontractor buys separate insurance coverage and the result can be duplication and overlap of coverage. This, in turn, can result in litigation between insurance companies over claims. Under OCIP, the Owner can ensure that there are no gaps or duplication in coverage because the Owner will deal with only one insurance company. The Owner also can ensure broader insurance coverage with higher limits and better terms and conditions that may not be available to most contractors outside the OCIP at lower cost.

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An OCIP can provide more efficient and simplified claims management because a single insurance company is handling claims, conducting investigation, making payments and preparing the loss data for the Owner. Under OCIP, the claim settlement procedures are more consistent. In addition, OCIP can reduce potential litigation and disputes between insurance companies and the associated costs because the policies are with a single insurance company.

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Minority/Disabled/Women Business Enterprises frequently lack the ability to purchase the required insurance coverages that are necessary for participation in large projects. An OCIP can eliminate this obstacle and allow the minority contractors to participate in large transportation projects.