Getting Savvy

And even while some construction clients are becoming more proactive in addressing their insurance needs, there's still a "major divide" in the industry with others, including subcontractors, that remain challenged with buying insurance, he says.

Smith oversees account and wrap-up operations, or Controlled Insurance Programs (CIP) for the company, which in addition to Builder's Risk also offers Workers' Comp, General Liability, Excess Liability, Pollution Legal Liability, Contractors' Pollution, Contractor's Professional and Pollution, Director's and Officer's Liability, Auto, Contractor's Property and Owner's Protective Indemnity.

TSIB is "very passionate" on both the underwriting side and the brokerage side on helping companies try to manage their business, says Smith, who has more than 23 years of experience working with construction insurance as an underwriter, risk manager and broker.

Prior to joining TSIB, Smith worked for Turner Construction Co. as corporate insurance manager and national director for its Contractor Controlled Insurance Program (CCIP)—a construction-industry alternative to an Owner Controlled  Insurance Program (OCIP) in which an insurance policy is held by the construction firm during the build. CCIPs typically cover virtual liability and loss arising from the construction project and include Commercial General Liability and Workers' Comp, known as a "wrap-up" in the industry.

Smith currently is responsible for managing TSIB's Wrap-Up Operations: enrollment; account negotiation and servicing; documentation verification; payroll reporting; auditing; marketing; and closeout.

Making the jump from managing the corporate insurance programs of a large construction firm to overseeing account and wrap-up operations for its surety and insurance brokerage sister company seemed like a natural move. "When I was with Turner [Construction] 10-plus years, I said, 'We have become experts on managing our business. Let's open this up and broker our own business: take this expertise and go out to other companies and manage that risk as well,'" says Smith.

TSIB now insures Turner Construction projects "and a lot of other companies throughout the country,"he adds.

Smith's group is on the operational casualty side of the business: managing surety arrangements and bonding capacities that have to do with surety underwriting; but surety is kept separate. They're concerned with managing the bonding capabilities for construction companies—or as he puts it, "Can you build to what you need?"

Their challenges are growing, says Smith, as construction is starting to pick up in certain regions of the country: the Boston area, northern California and Texas.

"I would say things are more positive than you've seen in the last four to five years. It's not across the board, so I think that's why some people are saying no," he says. "If you're in the Southeast, there's not too much; but if you're in Northern California, it's crazy."

Indeed, Apple and Google together have put close to $2 billion of work into new headquarters in Cupertino and Mountain View, respectively; and the city of Santa Clara is pouring an estimated $1.2 billion into a new stadium for the San Francisco 49ers.

Residential construction is also on an upswing in pockets around the country, such as in Hawaii, Boston and Texas. The Aloha State, in particular, is seeing a lot of residential construction, he says.

"Florida hasn't turned around so much," adds Smith. "Miami is going to start, we hope."

 Stressed areas in the construction industry during the recession need to be addressed, and construction companies are going to have to take a good look at their operations before jumping full-speed back into the fold, Smith says. "How well have companies managed their operations for the last six years? Are they capable now? Do they have the capacity? Can they hire all the people they'll need?"

Construction firms may also be challenged to complete their work. "A lot more folks have gone under. There have been a lot more defaults in last five to six years."

Subcontractor default is a big piece of the overall casualty insurance area, and that's where surety can come into play: Casualty insurance manages a company's expenses within a certain range, while surety is the vehicle that allows them to continue to do that work.

Major Builds

TSIB handles some of the country's largest projects

Past and current projects handled by Turner Surety and Insurance Brokerage include:

• Construction of the $2.3 million-square-foot Fort Belvoir Community Hospital in Fort Belvoir, Va., which will allow the U.S. Army to reorganize its medical resources in the area.
• The C4ISR Center of Excellence Aberdeen Proving Ground in Aberdeen, Md., a military installation of nine buildings, housing some 5,000 civilian employees. 
• The Fort Bend County Jail in Richmond, Texas, which received a 213,000-square-foot jail expansion and 40,000 square feet of renovations to the original prison facilities.
• Renovations to the University of Kentucky Patient Care Facility in Lexington, Ky., which will include an upgrade to the more than 40-year-old hospital bed tower. 
• The Miami Intermodal Center, a new transportation hub being built across from Miami International Airport by the Florida Department of Transportation.
• Renovations of Terminal 2 at San Francisco International Airport, part of a massive rebuild of the terminal to expand its current 10 gates to 14 gates.
• Princeton University's chemistry department's new laboratory, a 265,000-square-foot facility.
• The NASCAR Hall of Fame in Charlotte, N.C., a state-of-the-art facility that will honor the sport's crew members, team owners and others.