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Construction Projects – Owner Controlled Insurance Programmes (OCIPs)

An alternative procurement approach that can provide greater protection, control, and security.
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Globally, most standard contractual drafting makes the contractor(s) carrying out the project construction works responsible for insuring the construction and third-party liability risks:

  • Construction all risks (CAR) insures material damage to the project contract works.
  • Third-party liability (TPL) insurance covers legal liability to third parties arising from the project, primarily arising from injury or damage.

There are significant commercial benefits to owners and developers in arranging these insurances for themselves – through an Owner Controlled Insurance Programme (OCIP) – a solution that requires minimal amendments to the standard construction contract form.

Benefits of an OCIP

Cost

As the owners and developers are in control of the insurance costs, rather than the contractor arranging the cover and charging them for it, there is full transparency and less likely to be overlaps in insurance coverage.

Cover

An OCIP is designed to meet the development requirements of the owner or developer (not that of the contractor alone) and insure the project to the standard required, from start to finish. 

Control

Through an OCIP, owners and developers are named as the principal on the insurance policy, with control of the policy. There should be no concerns regarding continuation of insurance cover, should any issues arise and a contractor needs to be replaced due to non-performance, insolvency, or any other form of contract frustration.

Claims

Having a single insurance programme to cover all damage or legal liability events promotes a smoother claims handling process, minimizing the potential for dispute and offering a clear route to recovery.

For more information, download our OCIP brochure here

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FAQs

There are three core classes of insurance that form an OCIP:

  • Construction All Risks (CAR) – this policy covers physical loss or damage to the contract works. If there is insured damage (e.g. a fire), this policy will indemnify the insured for the cost of reinstatement of the damaged works.
  • Third Party Liability – this policy provides indemnity for legal liability following third-party property damage or third-party bodily injury arising from the works.
  • Delay In Start-Up – many clients are concerned about the revenue they will lose if the project fails to complete on time. Delay in start up insurance indemnifies the owner and lenders (if applicable) for financial loss following a delay in project completion, arising from an event which is covered under the CAR policy.

An OCIP approach also allows the owner to take a proactive view on the risks and the availability of mitigation solutions, including insurance. Other insurance products that you might consider will vary depending on the location and the nature of the project.

They might include:

  • Latent/inherent defects insurance.
  • Environmental impairment liability.
  • Marine cargo/transit insurance.
  • Terrorism.
  • Professional indemnity insurance (single project or owner’s protective).
  • Political risks.

Marsh would be happy to discuss these classes in detail on request.

Why Marsh

The complexities of construction projects require a deep understanding of the construction process and its associated risks. Our team of construction industry specialists serves as trusted advisors to many of the world’s largest construction project owners. As one of the world’s leading risk advisors in the professional liability insurance space, Marsh has the people, data, and insights to help you build a risk management and insurance program designed to meet your needs.

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Our people

Craig Charles

Craig Charles

Head of Owners and Developers, UK Construction

  • United Kingdom

Louise Mercer

Louise Mercer

Senior Vice President, Construction Infrastructure & Surety Practice

  • United Kingdom

Clare Cooke

Clare Cooke

Senior Vice President, Construction, Infrastructure & Surety, UK