Some utilities contractors are taking on large self-insured retentions to try to alleviate price increases in the volatile market for wildfire risks, but a continued focus on risk management is also important, experts say.
“A contractor generating $10 million of revenue may be able to drop an SIR of $100,000 to $250,000, but conversely there are some contractors that are beholden entirely to the utilities for revenue that haven’t got the ability to take an SIR and will hold deductibles at a lower level,” said Stuart Rae, executive vice president at AmWINS Insurance Brokerage of California in Los Angeles.
“Even contractors with a strong loss history and strong risk management practices are caught in an industry that is at risk of extensive litigation and claim activity based on variables beyond their control,” said Jim Lynch, San Francisco-based vice president of California brokerage at Burns & Wilcox Ltd.
“It doesn’t hurt to offer a narrative that describes your risk management process,” Mr. Lynch said.
“What I would recommend for smaller contractors is to find ways to differentiate themselves against the general industry,” said Kevin Collins, professional liability program manager and senior vice president at Victor O. Schinnerer & Co. Inc. based in Chevy Chase, Maryland.
From a risk management standpoint, companies need to look closely at contracts around assumed risk and the services they are providing, he said.
“Using best risk management practices consistently within the firm will put it in the best possible (light) to an underwriter to be able to offer coverage,” he said.
