Category: Latest Thinking

By Michelle Leighton and Juanita Gadsden

New York’s Avoiding Vexatious Overuse of Impleading to Delay Act (AVOID Act), effective for cases filed on or after April 18, 2026, represents one of the most significant procedural shifts in New York construction litigation in recent years. The legislation fundamentally changes how and when parties may be brought into a lawsuit, creating accelerated timelines that demand earlier investigation, faster decision-making, and more strategic coordination among project stakeholders.

For construction businesses, the impact extends well beyond litigation strategy. The AVOID Act directly affects incident response protocols, contract administration, insurance tenders, and risk transfer practices. In today’s environment, organizations that move quickly and collaboratively following a loss will be best positioned to preserve their legal rights and control claim exposure.

What Changed

The AVOID Act amends New York Civil Practice Law and Rules (CPLR § 1007) by replacing the historically flexible impleader process with strict statutory deadlines for bringing additional parties into litigation.

Under the new framework, third-party actions generally must be filed within 90 days after service of an answer, with similarly strict timelines applying at every subsequent tier of litigation. The intent of the legislation is to reduce delays caused by late identification of responsible parties and to streamline litigation proceedings.

The practical effect is clear: construction claims will now require much earlier analysis of liability, contractual obligations, indemnification rights, and downstream insurance coverage.

Why It Matters

The compressed litigation timeline significantly raises the stakes for early claim management. Delays in identifying responsible parties, reviewing contracts, or tendering claims may result in forfeited indemnity and contribution rights.

Construction organizations should expect:

• Earlier and more intensive claim investigations
• Faster coordination among insurers, brokers, counsel, and project teams
• Accelerated review of contracts and insurance provisions
• Increased emphasis on documentation preservation
• Potential early-stage legal expenses to protect downstream recovery opportunities

While the Act may increase activity in the early stages of litigation, it could also shorten overall case duration and improve opportunities for earlier resolution.

Recommended Risk Management Protocols

Immediate Post-Loss Response

Following any significant incident or lawsuit, contractors and subcontractors should immediately identify all potentially involved parties and preserve critical project documentation. Early investigation efforts should include:

• Collection and review of all contracts and subcontracts
• Preservation of photographs, site logs, inspection reports, and incident documentation
• Review of supervisory records and safety protocols
• Early analysis of means and methods responsibilities
• Prompt identification of all entities potentially subject to risk transfer obligations

Enhanced Contract Review Procedures

The AVOID Act places increased importance on rapid contract analysis. Brokers, insurers, defense counsel, risk managers, and project leadership should collaborate early to evaluate:

• Indemnification provisions
• Additional insured requirements
• Notice obligations
• Downstream insurance coverage
• Potential contractual risk transfer opportunities

Waiting until litigation develops may no longer be sufficient under the new statutory framework.

Proactive Contract Drafting

The strongest defense against accelerated litigation timelines begins before a project starts. Construction businesses should review and update contract templates to ensure:

• Clear indemnification language
• Proper additional insured wording
• Defined notice and reporting obligations
• Procedures for timely identification of responsible parties
• Alignment between contractual obligations and insurance program structure

Well-drafted contracts not only strengthen risk transfer but also improve operational readiness when claims arise.

Litigation Coordination

Early coordination among all stakeholders will be critical under the AVOID Act. Timely communication between project teams, brokers, insurers, claims professionals, and defense counsel can help:

• Preserve evidence
• Streamline investigation efforts
• Identify risk transfer opportunities early
• Avoid missed statutory deadlines
• Improve litigation positioning and settlement leverage

Timely Action is Critical

Failure to comply with the AVOID Act’s deadlines may significantly impair a party’s ability to pursue indemnification or contribution claims against other responsible entities. Missed deadlines could increase uninsured exposure, weaken settlement leverage, and create unnecessary litigation costs.

In this new environment, proactive claims management is no longer simply best practice. It is essential risk protection.

The Conner Strong & Buckelew Advantage

At Conner Strong & Buckelew, we closely monitor evolving litigation and regulatory developments that impact our clients’ operations and risk profiles. The AVOID Act is a prime example of how procedural changes can materially affect construction claim outcomes, contractual risk transfer, and insurance recovery strategies.

Our team works proactively with construction clients to:

• Review and strengthen contractual risk transfer language
• Align insurance programs with evolving litigation exposures
• Coordinate early claim response and investigation strategies
• Facilitate collaboration among insurers, counsel, and project stakeholders
• Support clients through accelerated litigation timelines and claim resolution efforts

By combining claims advocacy, construction risk expertise, and strategic coordination, we help clients stay ahead of emerging risks and protect their interests throughout the claim lifecycle.

Additional Resources

For a more comprehensive legal analysis of the AVOID Act, please review the following articles from Lewis Brisbois:

• The New York State Legislature Has Drastically Changed Third-Party Practice
• Navigating the Amendments to New York’s AVOID Act

By Edward Cooney and Bradley Watts

Cybersecurity is ever evolving as the way companies operate and do business changes. With more employees working remotely and using outside tools like AI assistants, the holes in many companies’ cybersecurity protocols are widening. Today, scams are being executed on a larger scale as bad actors become more sophisticated and leverage technology such as AI for greater efficiency. In this increasingly risky environment, companies across industries must zero in on the latest cybersecurity trends and implement key mitigation strategies to keep their systems and data protected.

The Conner Strong & Buckelew Advantage

Cybersecurity programs are a critical investment for companies across industries. They protect data and systems as attackers get smarter and breaches bring significant monetary and reputational consequences. The right insurance broker can be a valuable resource for companies navigating the development of cybersecurity programs that protect them against a range of threats.

At Conner Strong & Buckelew, our in-house cyber task force helps organizations shore up their cybersecurity and protection by:

• Continuously assessing today’s most pressing cyber risks and loss trends
• Providing a customized, maturity-model roadmap to help them understand where they are now and what they need in the future — in language that resonates with IT leaders and in the boardroom
• Connecting them with top-tier resources to execute a cybersecurity maturity model
• Evaluating vendor and other relevant contracts and insurance policies to identify risks and ensure appropriate risk transfer
• Designing and implementing comprehensive insurance coverage

Ready to arm your company with a strong cybersecurity program? Contact us today to partner with experienced professionals committed to protecting your business, reputation and bottom line.

By Dominic Micali and Joseph DiBella, REBC

Employers and plan sponsors are increasingly opting for self-funded health plans over fully insured health plans, in part, to gain access to detailed claims data that allows them to identify cost drivers and tailor benefits to better meet employee needs. This approach enables companies to directly manage their healthcare expenses, potentially reducing costs when claims are lower than expected while leveraging stop-loss insurance for financial protection against large, unexpected claims. For plan administration, such as member service and claims processing, self-funded plans rely on Third Party Administrators (TPAs). Depending on their goals, employers can choose from several TPA models.

The Three TPA Models

There are three types of TPAs employers can work with to manage their self-funded plan: a health-carrier-administered TPA, a true independent TPA and a hybrid, health-plan-owed TPA. While all models will support self-insured employers, the administrative experience, operational flexibility and overall employer and member impact can differ significantly. The appropriate TPA model ultimately depends on the employer’s priorities – whether they value integration and scale or flexibility, transparency and customization.

1. Health-Carrier-Administered TPA

   National health carriers are fully integrated insurance organizations that can provide administrative services for their fully insured plans and employers’ self-funded plans. When administering self-funded plans, these carriers commonly unbundle their fully insured infrastructure to deliver a familiar, standardized experience. This includes proprietary provider networks, claims systems, medical management and integrated reporting.

   While this TPA model does offer “plug-and-play’ convenience for employers, it also lacks transparency, flexibility and opportunities for customization. For example:

   • The carrier controls claims data and limits what employers see, reducing their ability to address care gaps or mitigate claims through population health strategies.
   • This model often limits vendor carve-outs, customization, network design and specialty program rules — and carriers typically mandate the use of their chosen or affiliated pharmacy benefit managers (PBMs).

   What a health-carrier-administered TPA does bring to the table is scale, stability, established processes and a comprehensive administrative platform. For plan members, there is typically no visible distinction between fully insured and self-funded arrangements under a carrier model. Familiar insurance company branding on plan ID cards makes the transition to self-funded seamless for employees.

2. True Independent TPA

   In contrast to a health-carrier-administered TPA, a true independent TPA is not associated with a national health carrier. They are focused exclusively on self-funded plan administration. These TPAs generally operate their own claims processing platforms and lease provider networks from carriers rather than owning them.

   While true independent TPAs may not have quite the breadth of infrastructure or brand recognition of a health-carrier-administered TPA, they are the most nimble — offering employers greater transparency and control, as well as the flexibility needed to support tailored plan designs. For example:

   • Data transparency and customizable reporting to provide employers with the comprehensive claims data needed to create health and wellness strategies tailored to their employee population.
   • Flexibility to support seamless integration of third-party vendors and giving employers freedom of choice with respect to pharmacy benefits administration, care management and other carve-out strategies.
   • Ability to adopt disruptive reimbursement models, such as reference-based pricing that reimburses hospitals at a transparent percentage of Medicare, allowing employers to achieve predictable, balanced reimbursements and long-term cost savings.

3. Hybrid, Health-Plan-Owned TPA

   Recently, hybrid, health-plan-owed TPAs have formed. These TPAs are owned – but not operated – by national carriers, offering some of the flexibility of true independent TPAs with carrier infrastructure. These administrators tend to be more responsive than their parent carriers, but share some limitations, such as:

   • In some instances, hybrid, health-plan-owned TPAs operate within strategic parameters established by the parent organization, so similar to a health-carrier-administered TPA, there are typically limitations around choosing vendors such as PBMs.
   • When it comes to data ownership and claims reporting, hybrid, health-plan-owned TPAs provide more access than the carrier would but are not as transparent as a true independent TPA.

TPA Models At-A-Glance

While there’s no one-size-fits-all approach to selecting a TPA model, employers will want to choose the one that best meets the needs of their business and employees. The table below compares the three TPA models across several key measures.

Comparison of TPA Models Across Key Measures

The Conner Strong & Buckelew Advantage

Working with the right TPA is key to ensuring the success of a self-funded plan. A strong broker partner can help employers determine which TPA model is the best fit based on organization size, priorities and employee population. At Conner Strong & Buckelew our team of employee benefits experts work with employers to conduct due diligence in evaluating TPA partners —  from breaking down TPA fees and embedded costs to identifying strengths and alignment with goals. Working together with our population health team, our employee benefits advisors help employers design a benefits plan that is tailored to their unique needs.

Ready to elevate your employee benefits strategy? Contact us today to partner with experienced professionals committed to helping you control costs and care for your people.

By Joe DiBella, REBC

PERMA FAIR is an indexed pricing platform designed to bring transparency, fairness, and long-term sustainability to employer-sponsored healthcare. Traditional healthcare pricing is largely driven by negotiated network contracts between large insurance carriers and hospitals. Those negotiations often result in reimbursement levels reaching 250%–400% of Medicare, which contributes significantly to rising healthcare costs for employers and plan sponsors. Because hospital services account for approximately 40%–50% of total healthcare spending, these pricing dynamics have produced cost increases that many employers and plan sponsors can no longer sustain. PERMA FAIR addresses this challenge by applying a consistent Medicare-based reimbursement methodology to paying hospital claims, creating a transparent and predictable payment structure. By replacing arbitrary negotiated pricing with a widely accepted benchmark, employers and plan sponsors can reduce medical spending by approximately 18%–25% while maintaining strong provider reimbursement and improving member benefits. The model combines advanced claim repricing technology with best-in-class third-party administrators and proactive care navigation, producing a system that is fair to hospitals, sustainable for employers, and protective of plan participants.

Why PERMA FAIR Matters Now

Healthcare costs are rising at unprecedented levels, and employer health plan budgets are under extraordinary pressure. At the same time, a new wave of fiduciary scrutiny is emerging around how employer health plans are managed. For decades, employers have carried fiduciary responsibility over retirement plans such as 401(k)s, ensuring that investment options and fees are reasonable and properly overseen. Increasingly, the same expectations are being applied to healthcare. Employers are being asked to demonstrate that reimbursement practices, vendor relationships, and plan structures are prudent, transparent, and aligned with the best interests of plan participants. In this environment, it becomes increasingly difficult to justify reimbursement levels at 250% or more of what Medicare pays without a defensible methodology.

Indexed pricing models such as PERMA FAIR provide a transparent and consistent framework that is far easier to defend from a fiduciary standpoint while simultaneously addressing the underlying cost drivers that continue to push healthcare spending higher.

The Challenge With the Current Healthcare System

Today’s healthcare system is largely dominated by large national insurance carriers often referred to as the BUCAs — Blue Cross, United, Cigna, and Aetna. These organizations assemble large numbers of covered lives and use that enrollment as leverage to negotiate reimbursement contracts with hospitals and providers. Over time this system has evolved through multiple plan designs including HMOs, PPOs, and high-deductible health plans. Yet despite these structural changes, the core challenge remains unchanged: healthcare costs continue to rise. In many commercial insurance contracts hospitals are reimbursed at levels reaching 250%–400% of Medicare, with significant annual increases layered on top of those rates. Because hospital services represent roughly 40%–50% of total healthcare spending, this reimbursement structure drives a large portion of the cost increases employers and plan sponsors experience today. Hospitals and insurers increasingly find themselves in conflict over reimbursement levels, while employers and plan sponsors are left to absorb the financial consequences.

The PERMA FAIR Solution

PERMA FAIR approaches healthcare pricing differently. Instead of relying on arbitrary negotiated network discounts, the platform uses the Medicare fee schedule as the foundation for hospital reimbursement. Medicare is the most widely accepted reimbursement benchmark in the United States. The schedule accounts for procedure complexity, geographic variation, and regional cost differences. Under the PERMA FAIR indexed pricing approach, hospitals are typically reimbursed between 140% and 160% of Medicare. This methodology provides consistent, transparent, and predictable reimbursement while allowing employers and plan sponsors to significantly reduce overall healthcare spending. Hospitals continue to receive fair compensation, employers gain financial sustainability, and the system benefits from a pricing structure that is grounded in an objective and widely accepted benchmark.

The Role of Third-Party Administrators

The PERMA FAIR model operates in partnership with leading national third-party administrators. Because indexed pricing disintermediates the traditional network negotiation model, it generally does not align with the structure used by large national carriers whose business model depends on negotiating network discounts. Instead, PERMA FAIR partners with best-in-class TPAs that administer self-funded health plans. These organizations handle claims payment, member services, enrollment, eligibility, ID cards, reporting, and account management. From the member and employer perspective the experience looks identical to any other health plan. PERMA FAIR functions as the pricing engine behind the plan, ingesting Medicare data and applying proprietary algorithms to reprice hospital claims before sending those claims back to the TPA for processing and payment. In many ways PERMA FAIR serves as the “intel inside” of the health plan.

Today PERMA FAIR partners with national TPAs including AmeriHealth Administrators, Centivo, and Lucent Health, each of which brings brand credibility and deep experience administering self-funded health plans.

Member Experience Under the Fair Health Plan

Under the FAIR Health Plan (the name of the member product), the participant experience remains simple and familiar. Members receive an ID card from the TPA and access care in much the same way they do today. However, the plan introduces a key advantage: members are not restricted by hospital networks. Participants may seek care at any hospital they choose. Because the plan pays hospitals using a transparent Medicare-based reimbursement schedule, there is no confusion around in-network or out-of-network status. Physician care is supported through large national PPO networks such as First Health, MagnaCare, and Prime, although members are not restricted to those providers. Most hospital services are paid at 100% of the indexed fee schedule, and physician visits generally involve only modest co-payments, allowing employees to access care with fewer financial barriers. As a result, many participants experience a plan that provides greater freedom of choice and fewer administrative hurdles than traditional network-based health plans.

The Economics of Indexed Pricing

The financial impact of indexed pricing is straightforward. If hospital reimbursement levels averaging approximately 250% and more of Medicare are reduced to a range of 140%–160% of Medicare, and hospitals represent roughly half of healthcare spending, the resulting savings become mathematically predictable. For many employers, the reduction in overall medical spending falls within the range of 18%–25%, depending on the organization’s claims distribution. Because the Medicare fee schedule increases gradually and predictably over time, this structure also creates a long-term mechanism for managing future healthcare cost growth. The savings generated by the model can be reinvested into stronger benefit designs while simultaneously reducing employer healthcare budgets. Importantly, these savings are not generated by shifting costs to employees through higher deductibles or increased contributions. Instead, they are achieved by applying a fair, transparent, and methodologically grounded payment approach to hospital reimbursement.

Billing Protection

One common concern regarding indexed pricing involves billing. If a provider attempts to bill a member for the difference between the indexed reimbursement and the provider’s billed charge, the FAIR Health Plan provides immediate protection. Any bill is routed directly to the TPA and in turn the PERMA FAIR team, who then engage with the provider to resolve the issue. Providers are informed of the reimbursement methodology and asked to work directly with the plan rather than the member. In most situations these issues are resolved collaboratively. When necessary, ERISA protections support the plan’s authority to determine reasonable reimbursement levels. Throughout the process members are protected and held harmless from financial exposure.

A Smarter Approach to Care Management

Traditional health plans often rely on complex prior authorization systems that delay care and create administrative friction for both providers and patients. The PERMA FAIR model takes a different approach. Rather than placing unnecessary barriers in front of care, the focus is on the individuals who drive the majority of healthcare spending. Approximately 10% of plan members account for nearly 90% of healthcare costs. By identifying those individuals early and surrounding them with clinical support and care navigation resources, employers can improve outcomes while controlling costs more effectively. Doctors and hospitals remain focused on delivering care, while the plan focuses on managing the overall healthcare program and ensuring that the right support is delivered to the members who need it most.

Medical facility claims represent only 10% of claims but comprise approximately 50% of spend

A Transparent Fee Structure

Many indexed pricing vendors that do what PERMA FAIR does charge fees based on a percentage of billed charges or calculated savings. Because billed charges often bear little relationship to the true cost of care, this approach can create misaligned incentives. PERMA FAIR instead charges a simple, transparent per-employee-per-month administrative fee. The fee is predictable, budget-able, and often one-third to one-half the cost of competing models. Because the fee is treated as an administrative expense rather than a claim expense, it also helps reduce stop-loss exposure for employers. The structure aligns incentives, maintains transparency, and ensures that employers clearly understand the cost of the services being provided.

Conclusion

PERMA FAIR represents a modern approach to healthcare pricing that aligns fair provider reimbursement with long-term affordability for employers and plan sponsors and better access for patients. By combining indexed pricing, best-in-class plan administration, proactive care management, and transparent fee structures, the model provides a sustainable framework for employer-sponsored healthcare. As healthcare costs continue to rise and fiduciary scrutiny increases, transparent methodologies such as PERMA FAIR offer a practical path forward for employers seeking to manage healthcare responsibly while protecting the interests of their employees.

By Simon Leung, PharmD, RPh and Jill Ambrose, MBA, BSN, RN

The weight loss trend isn’t going away any time soon. In a 2025 West Health-Gallup poll, 52% of adults in the U.S. said they would like to lose weight. With so many Americans looking to lose weight, the demand for weight loss drugs like GLP-1s continues to rise. According to Gallup, the use of weight loss injectables by U.S. adults more than doubled from 5.8% to 12.4% between early 2024 and late 2025. And more than 170,000 people are already taking the Wegovy pill that maker Novo Nordisk just launched in the U.S. in January 2026.

While the employee benefits talk had focused mainly on the high cost of these drugs, increased utilization is now compounding the GLP-1 conundrum. Both issues pose a great challenge for employers as they look to support employees in bettering their health while balancing the short and long term expenditures. With the arrival of GLP-1 generics for weight loss not expected in the U.S. until late 2031 at the earliest – and the Food and Drug Administration’s recent actions to limit compounded drug production – there are no lower-cost options on the market.

While there is no “silver bullet” for the GLP-1 conundrum there are new access pathways emerging, beyond traditional pharmacy benefit managers (PBMs), that could prove effective for plan sponsors depending on their budget and goals.

Direct To Consumer

At the end of 2025 manufacturers Eli Lilly and Novo Nordisk launched direct-to-consumer programs that allow patients with prescriptions to purchase GLP-1s for weight loss directly from the manufacturers at lower prices. Through these programs cash-paying patients can purchase Eli Lilly’s Zepbound (tirzepatide) injectables for as low as $299 for the starting dose, Novo Nordisk’s Wegovy (semaglutide) injectable for $349 per month at the lowest dose and the Wegovy pill for $149-$299 per month. When accessed through the employer PBM these same medications can cost the employer anywhere from $700 to $1,000 per month.

The direct-to-consumer pathway does not coordinate with insurance and is designed for individuals without GLP-1 coverage, meaning employers can’t tap into these lower prices directly. However, if they completely remove GLP-1 coverage from their PBM, employees might turn to the direct-to-consumer pathway to access these drugs. While that approach might offer significant savings for employers, it puts the cost burden directly on employees – and the price might end up being higher for them than an insurance co-pay would have been – which could potentially dampen employee satisfaction with their benefits. Plan sponsors will have to weigh the savings with their recruitment and retention goals.

Direct To Employer

In January 2026 Eli Lilly and Novo Nordisk began testing direct-to-employer models that allow employers with self-funded plans to bypass traditional PBMs and work directly with vendors or specialty pharmacies to include GLP-1s in their health plans. By working directly with the vendors or specialty pharmacies instead of a PBM, employers get improved transparency which helps them forecast drug spending, as well as pricing as much as 30-40% lower than PBM pricing. These vendors will also manage eligibility, prescription fulfillment and ongoing care – lightening the administrative burden on employers. Direct-to-employer programs can help employers access GLP-1s at a lower cost, however, the utilization challenge driving up overall costs remains and is likely to increase as the costs to employees go down.

Some direct-to-employer vendors help control utilization through a wellness management component. For example, the vendor might have their own network of obesity specialists who clinically evaluate each case for eligibility and work with approved patients on an ongoing basis. While these wellness programs can help control utilization, they come at an additional cost that could negate much of the net savings over PBMs. There’s also the option to add wellness programs through the PBM model. It comes down to a numbers game and plan sponsors will need to evaluate what’s best for them based on their budget, employee population and health plan goals.

Targeted GLP-1 HRAs

Another option that allows employers to move GLP-1s out of their pharmacy benefit is the use of a health reimbursement arrangement (HRA) specifically targeted for GLP-1s. An HRA is an employer-funded benefit that reimburses employees tax-free for qualified medical expenses. Through this set up, employees would access GLP-1s through the direct-to-consumer programs and the employer would be able to subsidize some of the cost – delivering a more supportive arrangement.

Employers using an HRA need to be explicit that it only covers expenses for GLP-1s for weight loss. The HRA allows employers to have greater control over utilization, by dictating who qualifies through eligibility requirements, such as a body mass index (BMI) threshold or diagnosis of certain comorbidities. While this arrangement isn’t a “silver bullet,” it does allow employers to set contribution limits and rollover unused funds. Plan sponsors might want to consider out-of-the-box arrangements like HRAs to control costs and utilization while keeping employees feeling supported.

Non-Pharmaceutical Options

Outside of GLP-1s for weight loss, there’s also a growing market for non-pharmaceutical weight management products. In August 2025 the U.S. Food and Drug Administration approved the first over-the-counter continuous glucose monitor (CGM) indicated for weight management. The product is designed to help users build healthy habits by better understanding how their body reacts to certain foods.

An advantage of non-pharmaceutical weight management vendors is that these programs can be utilized by all employees, helping to improve overall population health and lower medical spending. Plan sponsors can also use them as a utilization management tool, requiring employees to participate in a structured lifestyle or nutrition program from a chosen vendor before they can become eligible for GLP-1s under the pharmacy benefit. Again, these programs would be an additional cost – but employers should weigh the payoff of a healthier employee population in their decisions.

Your Partner In GLP-1 Strategy

As the GLP-1 landscape evolves new strategies to contain spending and utilization continue to emerge. While there is no perfect solution that’s right for every employee population, a good benefits consulting partner will work with you to determine an approach that fits for your organization. At Conner Strong & Buckelew our consultants, population health and pharmacy practice groups are working on the frontlines — developing data-driven strategic solutions that help organizations manage the GLP-1 conundrum. We can help your company stay up to date in the rapidly changing landscape and work with you to build custom solutions for your business. Contact us to learn more.

By Daniel Brettler and Andrew Wagner

Over the next several years, a surge is expected in the construction of new domestic pharmaceutical manufacturing and research facilities, as well as major construction projects to renovate and expand existing U.S. pharmaceutical facilities. Among the key factors behind the rise in pharma company construction are increasing tariffs on imported goods by the federal government and the desire to have better controls over supply chains. Another factor contributing to the expected boom in domestic pharma construction is the opportunity to take advantage of FDA PreCheck, an initiative which cuts regulatory red tape for pharmaceuticals manufactured in the U.S.

While the long-term fiscal and operational advantages of U.S.-based manufacturing are evident, pharmaceutical companies need to find ways to maintain tight controls over construction-related costs and minimize the liability exposures inherent with large construction projects. For large construction and renovation projects with budgets of $100 million or above, an Owner Controlled Insurance Program can be an effective tool for achieving significant cost savings, reducing potential coverage gaps and mitigating liability exposures — all while giving pharma companies greater control.

What Are Owner Controlled Insurance Programs?

An Owner Controlled Insurance Program (OCIP) is a single insurance program designed to cover liability arising from large construction projects. Held and paid for by the property/business owner, OCIPs typically include key coverages such as general liability (including completed operations), workers’ compensation and excess liability. They can also be expanded to include coverages such as professional liability, pollution/environmental liability, etc. Coverage under an OCIP extends to all of the involved parties, including the owner, general contractor and all subcontractors — creating a streamlined, uniform approach that offers several key advantages.

How Do OCIPs Benefit Major Pharma Construction?

OCIPs offer significant advantages for large pharma construction projects with insurance budgets of $1 million and beyond. These advantages fall into two primary categories: cost savings and greater control.

Four Ways OCIPs Drive Cost Savings

• Savings through economies of scale: Securing coverages under one policy provides pharma companies with more purchasing power and the advantage of economies of scale that can support significantly improved pricing, better terms and higher coverage limits. And the savings, which would otherwise go to contractors as premium or contract expenses, are often substantial.
• Savings through higher deductibles: With deeper resources than general contractors and greater control over safety and risk control (outlined below), pharma companies can utilize contractor insurance credits to fund higher deductibles on the OCIP based on their own risk tolerance. Any unused deductibles under the OCIP go back to the owner, whereas unused deductibles under a contractor controlled insurance program (CCIP) go back to the general contractor to improve their bottom line.
• Savings through reduced litigation costs: Having all of the contractors and subcontractors covered under a single insurance contract eliminates questions and issues around who the negligent party is when a claim occurs, so the owner is not burdened with the time and expense of managing contractor vs. contractor litigation or subrogation issues.
• Savings through tax-advantaged funding: Owners typically utilize contractor insurance premium credits to fund deductibles for an OCIP program. When deductible premiums are funded through the owner’s captive insurance company, the tax benefits can be significant. Premiums associated with risks for third parties, such as contractors and subcontractors, are traditionally tax advantaged and viewed favorably by the IRS.

Greater Control in Three Key Areas

• Control over interior outfitting: The interior outfitting of a pharma facility can include specialized equipment general contractors don’t commonly handle. Due to the special nature of the equipment and the precision with which it must be installed, most owners prefer to purchase the equipment directly and have it installed by the manufacturer. An OCIP allows for such owner-controlled elements of the project to be covered where a CCIP does not.
• Control over safety, risk control and compliance: While general contractors manage site safety, they may not be well versed in the higher safety and regulatory requirements specific to pharma facility construction. An OCIP secured through a broker with construction safety, risk control and life science compliance expertise can deliver additional oversight and foster a safety and compliance culture that helps reduce injuries, lawsuits and fines.
• Control over contractor selection: An OCIP provides owners with more control over the selection of project contractors. For example, the owner may wish to engage with a minority enterprise for social or tax credit reasons, but the entity may not have sufficient insurance limits to qualify under a non-OCIP program. Under an OCIP, the owner can negotiate an exception with the insurer that would provide coverage for a preferred contractor.

Four Essentials to Look for in a Broker Partner

OCIPs have evolved and improved significantly over the last 10 to 15 years, so it is crucial to work with a broker that has kept up with the changes and has the right experience and resources to help you maximize the advantages of this approach, including:

1. OCIP administration resources: Partnering with a broker that can deliver robust OCIP administration services is crucial because it lifts the majority of the administrative burden from owners and risk managers.
2. Extensive OCIP experience: Working with a broker that has extensive experience in OCIPs and construction market alternatives is essential to secure the comprehensive coverage you need at the best possible terms.
3. Dedicated life science team: Collaborating with a broker that has specialized life science expertise is vital to ensuring your OCIP coverage meets the unique needs of pharma manufacturing and research facilities.
4. Deep bench of safety and risk control professionals: Teaming up with a broker that has dedicated in-house experts to help you promote a safety culture can lead to safer worksites and reduced liability exposures that translate to savings.

Partner With Us

Conner Strong & Buckelew has a proven track record of structuring OCIP solutions that enhance our clients’ protection while delivering millions in savings. Our seasoned life science and construction professionals understand the unique needs and requirements of pharmaceutical construction projects and will work with you to develop a customized OCIP for your project.

20% of our team is dedicated to safety, risk control and claims advocacy & consulting —  including experts with 20+ years of experience who will work with the general contractor and your safety personnel to promote a safety culture and identify ways to mitigate risk.

Your Partner in Safety

Our safety and risk control team will be actively involved for the duration of your project, including:

• Attending pre-construction meetings
• Making routine site visits and visits for emergencies (i.e. injuries, weather events, labor issues, etc.)
• Supporting regulatory compliance, including OSHA visits
• Providing guidance on worker orientation and training

Superior Administration Support

Unlike most brokers, we can help support the administrative aspects of your OCIP through our owned affiliate company that specializes specifically in controlled insurance program administration — which means less heavy lifting for you and your risk manager.

Contact us to learn more about how we can deliver an OCIP solution tailored to the unique needs of pharmaceutical and life science organizations.