INSURANCE AND SURETY HUB INTERNATIONAL Insurance and surety broker partners with contractor clients for risk management and profitable bidding Canadian Design and Construction Report special feature HUB International, as a leading international insurance broker, offers a broad array of products and expertise to help clients manage their evolving risks in a constantly changing world. Nelly Toledo, a Canadian Accredited Insurance Broker, partner and vice-president with HUB, helps her clients meet their risk management needs with a perspective and expertise that comes with 30 years of insurance experi- ence, 20 of which have been focused on the construction industry. “I meet regularly to discuss my clients’ progress or any project issues they may encounter,” she says. “Part of my job is to be constantly sharing ideas to ensure my clients are receiving top notch advice and service.” For the coming year, Toledo says there is no expectation that rates will change. However, busi- ness owners should be aware that there may be more demand for Contractor’s Errors and Omissions and Environmental Liability cover- age. “Insureds should be cautious when remitting their bid as these coverages are not often included as part of the insured’s general Scott Beitel package. The premium for these coverages can be substantial and, if the cost is not in- cluded in the bid, it may have a considerable impact on the contractor’s overall profit, if they are successful in securing the job.” As the new year is always a good opportunity to take stock of a business and its position, Toledo suggests there are some important coverage issues all businesses should be aware of including: the basis of loss settlement on rented contractor’s equipment is usually actual cash value and should be amended to replacement cost (often re- stricted to five years from date of manufacture), as stipu- lated in most rental contracts; weight overload exclusions should be removed under equipment and liability cover- ages; ensure coverage is not excluded on equipment situ- ated or being operated underground; ensure explosion, collapse and underground work is not excluded under lia- bility; be cautious of frost and freezing exclusions. It is not just general insurance coverage that factors into the insurance picture. Scott Beitel, Ontario surety leader, says part of his role is working with colleagues across the country to enhance and promote surety products. “There are differences regionally depending on municipalities and 28 – Winter 2015 — The Canadian Design and Construction Report various bond owners which are important to understand,” he said. “HUB’s breadth of experience and geographic range makes this easier.” Beitel says despite the fact that surety has been around for a long time, people still don’t understand its complexi- ties. He says surety is underwritten much differently than insurance and can be difficult to secure without proper guidance. “Surety is a more intimate process,” he says. “One of our first tasks is to educate our clients on the process involved and the time commitment.” He says early involvement with clients is crucial be- cause a surety bond broker can identify problems with con- tracts proactively and then act as a resource, consulting across a range of specialties. “We have consultants we can call on for legal guidance, or for engineering advice,” says Beitel. “Many of us have specific industry experience including finance, accounting, un- derwriting and construction. As an office specialized in surety, we re- view multiple contracts daily so we have experience other firms may not.” He says in many cases the onus and risk on projects is being pushed further down the line as part of the norm and while some contractors may accept the risk without receiving a higher reward Nelly Toledo for that added liability, many oth- ers are not even aware the additional risk is there. HUB reviews contracts regularly and tries to give clients advice early on in contract negotiations to respond more proactively to the terms and conditions set out and to give advice to clients on requests to take back to the prime con- tract. He says it is also important for contractors to under- stand who the end owner on a project is. “With a greater number of consortiums, joint ventures and new project owners, contractors need to have a clear understanding of who they are working for and the liabilities that are both laid out and implied.” With industry changes including project bundling, Beitel says competition from foreign interests, decreased mar- gins and more onerous contracts make it more challenging for contractors, and additional issues including cash flow management and hold-backs add additional pressure. Beitel says that by “getting involved in a project early, HUB becomes a business partner both on the surety and non-surety side. We can help structure a contract with the end in mind and can assist with other aspects of the busi- ness to ensure a project succeeds.”