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					  Risk Management
    and the CCA
  Insurance Manual

New York State Council of Contracting
          Agencies (CCA)
        Procedure Manual
          November, 2011
     Objectives of this Presentation
1.    Introduce basic risk
      management principles.
2.    Describe contractual
3.    Introduce the CCA Procedure
4.    Using the Manual to draft
5.    Using the Manual to set limits.
6.    Ensuring compliance with
Loss exposures associated with
       public contracts

    Public projects are risky business!
Somebody could get hurt because of a
        defective product.
Contractor may not do the work right.
 Loss of “the work” (property).
Bodily injury (BI) or death to
   contractor employee.
 Property damage (PD), BI or
death of third party because of
          “the work.”
PD, BI or death because of defects
  in the work after completed.
PD, BI or death because of a latent
 condition or something known to
         the public entity.
           Risk Management
   The process for making and carrying out
   decisions that will minimize the adverse
          effects of accidental loss.

The organized treatment of loss exposures by…
Exposure Avoidance

   Just Don’t Do It!
 Going bare-back
 Retain any loss exposure
  that can be controlled
  when you can absorb the

Those who fail to plan…
             …plan to fail.
           Loss Control

 Trying to “be
 Organized
  programs for
  inspection and
            Loss Reduction

Lower the severity of losses that may be unavoidable.
              Band aid after the fact.
Duplication of Safeguards

     Belts and suspenders
 Contracting the Loss Exposures to
 Control of the premises or the work
 Delegating the means and methods to
  independent contractor
 Indemnity provisions

    To the rescue!             Risky Projects

 Assure contractor’s financial responsibility.
 Make the contractor buy insurance for agency.
        Contractual Protection
 Assure that vendors stand
  behind products.
 Central to all public
 Contractor controls site,
  means and methods of
 Contractor is
 Contractor is financially
 Contractor must save
  public entity harmless.
Contractual Protection

Allocate the risk of loss to those
 who are best able to prevent it
      Contractual Indemnity
 New York law prohibits making another party
  hold owner harmless unless, and then limited
  only to the extent of owner negligence.
 Indemnity extends to any claim arising from “the
         Contractual Indemnity
 Works in most cases where work being
 Few unpleasant cases of “finger pointing.”
 We avoid many disputes by requiring
“To the fullest extent permitted by law, the
Contractor shall indemnify and save harmless
the State… from … claims… arising from the
contractor’s work under this contract…”
Transfer of the financial consequences of a loss
  exposure to the insurer in exchange for the
            payment of a premium.
Insurance Works Where…
 There is a pure risk beyond control.
 Losses of predictable value occur at a
  known probability and regularity.
 Losses can be spread between a large
  number of insureds.
 Everybody won’t have a loss at once.
Insurance Necessary Where…
 There is any question about the financial
  responsibility of a contractor.
 There the expertise of professional risk
  management and adjustment are required or will
  add value.
Claim Services
Insurance: The Dark Side
     Insurance: The Dark Side
 Adverse selection-
  only people who need
  insurance will buy it.
 Moral and morale
  hazards- causing a
  loss deliberately, or
  “who cares, we have
     Insurance: The Dark Side
 It adds cost- about
  15% of the cost of the
  insurance goes to
 Defending claims is
  expensive too.
Insurance: The Dark Side
   Denial of Coverage
             After a claim, if….
             Agency fails to
              comply with a policy
             Denial must be timely
              (10-30 days).
             Notice of claim
       Insurance: The Dark Side
        Disclaimer of Coverage
 After a claim, if….
 Claim is “excluded.”
 Denial must be timely
  (10-30 days).
 Pollution.
 Not arising from
  “work” or
Insurance Doesn’t Always Pay
        Types of Insurance for
        Public Entity Contracts
 Contractors often have
  MORE insurance.
 Agency requires only
  what Agency needs.
 Agency requires only
  what is available.
 These are the basic
Review and Discussion of the
 Manual and how to use it.
        Council of Contracting
          Agencies (CCA)
 Created within the Executive Department by Executive Order
  Number 125 on May 22, 1989 to ensure the systematic collection
  and timely exchange of information relevant to agency
  determinations of responsibility and reliability of bidders,
  contractors1 and proposed subcontractors.
 On June 24, 2004 the Council of Contracting Agencies established
  the Insurance Subcommittee for the purposes of establishing general
  insurance standards and practices among participating Council
  Agency members.
 Council of Contracting Agencies
  (CCA) Mission Statement
Provide a standard for consistent insurance-related language
and requirements for use in Agency contract documents. While
the standards referenced in the manual have been developed via a
collaborative effort involving all of the participating agencies and
insurance industry representatives, and the Council believes these
standards to best meet the needs of the Agencies operating in the
current contract and insurance industry environments, the Council
also recognizes that each agency faces its own unique operations
and contracting needs. Therefore, it is understood that each Agency
may find a need to deviate from the standards presented here as it
deems necessary.
    – The public entity
      engaged in contracting
    – Your employer.
“Insurance Analyst”
          – Recommends
            insurance language
            and/or requirements
            for use in contract
          – Evaluates and
            approves proof of
      Persons who provide..
      – Services (contractor or
      – Goods (vendor).
      – Tenants.
      – Permitees/licensees.
      – Revenue contracts.
How This Manual Is Organized
       Chapter 1- Summary
                  A summary
                  Steps to completing and
                   tracking insurance
                  Reference materials that
                   are available in this
How This Manual Is Organized
     Chapter 2- Insurance Requirements
 Insurance Requirements need to be considered as part of
  the procurement process.
 Remember, this manual addresses only the most
  common exposures for our organizations.
 You will run into situations that are not covered here.
 Choosing insurance requirements in those cases will
  require some assistance from the Insurance Analyst.
How This Manual Is Organized
Chapter 3- Model Insurance Specifications
                      Provides model insurance
                      Including requirements
                       that pertain to all forms of
                      This language is not to be
                       used without some
                       thought to the scope of
                       work and applicability.
     You can cut and paste –
 with CAUTION.
 Consult your Legal Dept and/or risk
  manager….this manual is NOT the final
  word on insurance requirements and limits.
How This Manual Is Organized
       Chapter 4- Matrices
                  Provides matrices of
                   insurance limits.
                  Address common
                  Thought should be given
                   to increasing or
                   decreasing these limits as
                   appropriate to the scope
                   of work.
                  Again, consult your
                   Insurance Analyst as
How This Manual Is Organized
   Chapter 5- Model Procedures & Forms
 Provides model procedures, sample letters, insurance
  review checklists, and other information that CCA
  agencies have found helpful in their operations.
 It is best to provide the Contractor with instructions and
  sample documents as part of the procurement process to
  minimize errors. However, errors will always exist and
  the agency should conduct reviews of the insurance
  documents at appropriate times.
 Each agency will have to devise its own process, specific
  to its needs and operations. The materials here are offered
  to assist in that process.
How This Manual Is Organized
Chapter 6 & Exhibits- Reference Purposes
 These materials are offered for your reference.
 The Glossary is not all inclusive, nor is it limited to
  those terms that are included in this manual.
 Rather, it covers a wide variety of terms that are used in
  the insurance industry.
 Sample policy and endorsement forms are also included,
  as well as materials produced by the NYS Workers’
  Compensation Board.

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