PIACT Supports Competition for Municipally Funded Construction Projects

March 14, 2003

Steven Imbriaco, government affairs counsel for the Professional Insurance Agents of Connecticut Inc., told the Insurance & Real Estate Committee of the Connecticut General Assembly during a public hearing on Tuesday that competition is essential when writing insurance for municipally funded construction projects.

The PIACT therefore strongly supports Raised Bill No. 1016, which would prohibit the required use of owner-controlled insurance programs (OCIPs) in contracts for public construction contracts.

“There are a number of reasons why Bill No. 1016 is deserving of this committee’s support,” Imbriaco stated. “The required use of a single owner-controlled insurance program in contracts for the construction or repair of public buildings patently removes competition from the market for insuring these projects. Currently, contractors who maintain high standards for safety for their workers are in a position to compete on jobs, even if they are smaller businesses, because they enjoy favorable insurance credits that reflect their good loss experience.”

Imbriaco cited a number of practical problems arising because of OCIPs. He told the General Assembly that many municipalities now have various insurance coverages, including liability. If a different insurance carrier is required by an OCIP on a public construction project, questions of coverage might arise should there be a liability claim.

“Also insurance gaps can arise, which can be difficult to resolve,” Imbriaco continued. “An insurance agent working with a contractor-client may have difficulty crafting a seamless package of protection for that client, when a major job is covered by an OCIP over which the agent has no control. Other problems can arise in providing an adequate level of completed operations coverage for the individual contractor, and in securing the appropriate rate credits on the contractor’s own coverage to reflect the coverage provided by the OCIP.”

The PIACT said it “consistently bolsters bills that protect the insurance consumers of Connecticut, and feels that the prohibition against OCIPs proposed by Bill No. 1016 is in the public’s interest.” Imbriaco indicated that this support favored “open and fair competition for contractors,” and added that “We strongly believe that publicly funded construction projects should not be the exception.”

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