by Colleen Suo
I recently had an opportunity sit down with Peter Wilcox of the Travelers insurance company. With 25 years experience in the insurance business, he is currently a National Underwriting Officer for the Inland Marine Division and previously was the technical director for the Inland Marine Division, utilizing his extensive experience dealing with risk management in New England and the northeast. Wilcox, who holds a BS degree in safety from Illinois State University, is a Certified Safety Professional, a member of NFPA 241 Technical Committee, Standard for Safeguarding Construction, Alteration, and Demolition Operations, and served with the U.S. Army.
The Inland Marine division covers non-typical property — property that’s mobile or doesn’t really have a “place.” Construction of a new building fits this description because it is mobile — “growing out of the ground” and can’t be pigeonholed in the insurance world. Inland Marine’s role is to help contractors develop other programs around protecting their equipment and the building while it’s under construction.
His enthusiasm toward helping contractors realize insurable worksites was evident as he talked about thinking outside the box when it comes to business insurance. “It’s fascinating, there are so many things — new exposures that we don’t think about — because you’ve got the conventional exposures of a building”, which include fire, water, and collapse issues. The first thing Wilcox thinks about in relation to inland marine coverage is prefabrication.
“There is so much modular construction going on — you’ve got all that new stuff that was going on in NYC — in Brooklyn. A lot of office towers going up and it was prefab — being built offsite — being delivered and then erected up into place.”
And it’s not only office buildings being erected this way — apartment complexes, student housing and hospitals — anything that is made up of multiple similar units. Some prefab companies are just in the business of building bathroom pods. It’s called pod construction – the room is finished off (toilet, vanity, towel bars) and delivered to the job site in a finished condition.
With the exception of left or right configuration, they are all the same.
Since time is money, pod construction speeds up the process. While the foundation is being dug and secured, there’s a factory offsite “not inside the fence, but at someone else’s warehouse just building these pods.” That is an insurable risk. Who’s responsible for that and does that building have good fire protection? Could someone come in and steal the copper or other valuable items used for the bathroom construction?
Wilcox continued, “Our job is to inform contractors that this is an insurable risk and they need to go to their agents and ask how do I insure this — is it included in my policy or not? Is it simple to include on my policy? We help our agents to understand that it can be included on a policy.” They want contractors to know what kind of limits there are and most importantly, to understand the whole risk of manufacturing units “out there”, and the onsite exposure “in here”.
For example in modular or pod construction, the unit is in storage in one location where it could be exposed to Mother Nature (although it’s most likely wrapped in plastic) then it has to be loaded onto a trailer and moved to the construction site — “so now there is transportation exposure — we have a crane picking it up, maybe putting it in storage again or maybe lifting it right up and into place. But the roof isn’t on the modular unit yet because there are ten more stories to be built above it.”
Wilcox then mentioned that the insurable risks and variables of modern construction don’t stop there. Perhaps you’ve heard the phrase Internet of things (IoT). In an article on forbes.com (A Simple Explanation of ‘The Internet of things’ by Jacob Morgan), IoT is defined simply as “the concept of basically connecting any device with an on and off switch to the Internet (and/or to each other). This includes everything from cellphones, coffee makers, washing machines, headphones, lamps, wearable devices and almost anything else you can think of. This also applies to components of machines, for example a jet engine or the drill of an oil rig. As I mentioned, if it has an on and off switch then chances are it can be a part of the IoT.”
So now there is a whole new aspect of inland marine coverage: the computers that all the workers are bringing onto a worksite, assorted software and hardware, not to mention the business and personal information stored on these devices.
Wilcox explained that a typical property policy only includes coverage for computer equipment at a named location — within 1000-feet. “What if you have engineers or contractors working worldwide? I went to a contractor’s facility and they must have had 150 empty iPad boxes because everybody out in the field had an iPad. If you start adding up the numbers on how much money that is — the software, time and energy to back them all up, tech time if something crashes — there is a huge exposure. Not to mention, now some of this equipment is at the job site in the trailer with other electronic devices. There’s people coming and going at the trailer — deliveries, trades people, people looking for a job — are they doing their interviews on the site?”
As mentioned in Morgan’s article, smart buildings are the natural progression of the IoT and people’s fascination with techno gear.
Controlling the indoor environment from your smart phone from another location — temperature, lighting, electronics and appliances. That means contractors are putting devices into the buildings while the building is under construction. We are all aware of hackers and ransom wear for computers — are we going to see that sort of thing in buildings in the future? Is there insurance coverage for that? How do you protect the building?
Wilcox said, “It all starts back at the builder’s risk phase, knowing who’s working on your building. If security is lax, someone could pose as a contractor and do possible damage or just take the opportunity to scope out the equipment.”
Wilcox has spoken to contractors that haven’t even given the security of their software a consideration. Think of all the information that is shared and stored via the “cloud” today — building information, modeling, mapping, sharing plans, making corrections, real-time updating — what sort of security is put in place for that? Are your passwords protected from wondering eyes, or are they posted on a sticky note to your dashboard or on the outside of your laptop?
Borderless worksites are here, now and have been for some time. Be sure you have the layers of protection you need beside the coverage from a policy. Added security is a must, but not just a fence. Add electronics, maybe a guard or cameras, GPS technology (geo fencing for some equipment). However, we also need to know the limitations of the technology employed, for instance, a camera may be a good choice for the beginning of a build, but once the building starts to grow with scaffolding, etc. proper camera placement may not be available to actually see anything. Wilcox suggests to just stop and look around during the various phases of a project.
“ Stop and think. Look around — focus on what’s happening around you. There’s so much more to be protected beyond the fence in the construction world today. Start talking with your agents and brokers — really start digging into it — to make sure you have the coverage you need for the job sites you’re working on.”