The demand for bridge contractors is increasing as the political will has resolved to fix our crumbling infrastructure. Harvey Goldenberg, senior vice president, Burns & Wilcox, says “I think the Minneapolis bridge collapse opened people’s eyes about infrastructure problems in this country and the fact that the dollars don’t seem to be readily available to make repairs and improvements.” Tom Murphy, Quaker Special Risk, reports, “We see states and regions and individual cities taking a much closer look at their infrastructure and determining what condition this bridge or road is in, when it was last inspected, and so forth. Some work is being done immediately that wasn’t on the schedule to be done now.”

While this can mean quite an increase in the number of projects for bridge contractors, according to Rob Brewer, vice president and construction group manager for Travelers, it also increases the strain on public agencies. He states, “Bridges have traditionally been designed by the state department of transportation engineers. Those resources are now kind of maxxed out and they’re asking contractors to partner with engineering firms to design bridges. The growth of design/build and the recent emergence of integrated project delivery mechanisms has created an entirely new exposure for contractors.”

Dan Noe, underwriting manager for the Bituminous Transportation Contractors Program, is still concerned that, “there's a lot of talk, but I don’t necessarily see a sudden influx of money and jobs for bridge contractors. I think it’s going to be there and it’s just a matter of getting the money.” When asked if he was concerned that inexperienced contractors might be utilized, he stated, ”I’d be very surprised if that happened. Most contractors we talk to these days have plenty of capacity and are looking for work. There are always exceptions but they are in the minority.” Mr. Brewer expanded on that, saying, “Bridges are very complicated construction projects and contracts are not awarded based only on cost. The Minneapolis I-35 project was awarded based not only on cost but also on design elements and speed of construction. I would say that an inexperienced contractor probably won't qualify. While these are public jobs, public jobs don’t always mean low bids. The term usually used is ‘lowest qualified bidder’.”

According to all the respondents, the marketplace is a mixture of admitted and nonadmitted players. CNA, Bituminous, Lexington and Travelers are all active markets. When discussing the general liability line, Thomas Grandmaison, vice president, Lexington Insurance Company, says, “As a surplus lines insurer, Lexington provides this coverage on a nonadmitted basis. However, our admitted AIG affiliates can often provide admitted paper when it’s required by contract. Right now, there are around 20 to 25 states in which we can do so.” Mr. Murphy adds, “In our area, I would say a decent percentage goes nonadmitted, at least on a primary basis. Excess typically is admitted." Angela Williams, vice president-California brokerage, Burns & Wilcox agreed, saying” The admitted market might be involved in the excess, but in most instances the primary would in the nonadmitted market.”

Geography has a serious impact on coverage availability. However, it is not physical geography. Instead, it is state labor laws. Four states in particular—California, Illinois, New York and Texas—are of particular concern because of third party over actions. According to Mr. Brewer, “The scenario is that an employee of a contractor is injured and has the ability not just to recover under workers compensation, but also to sue the general contractors on the job.” Mr. Grandmaison expounded on the New York labor law, explaining that because of labor laws called 240 and 241, “If a person falls from a height of 12 inches, that person can be entitled to a pretty big payout.”

General liability, the largest line of business, is also where potential coverage gaps exist. Mr. Murphy emphasized the need to stay with forms at least as broad as those of the Insurance Services Office (ISO). He says, “There are certain carriers, at least in the E&S realm, that provide coverage on a more restrictive basis.” He is uncomfortable with taking a lower premium at the expense of coverages being taken away from the contractor. Mr. Brewer points out that bridge contractors have special coverage needs, including pollution, professional, owners and contractors protective and railroad protective, that other contractors may not need. Marve Feucht, underwriting consulting director at CNA Risk Control, points out a particular problem when a bridge contractor is part of a wrap up, since the products/completed operation coverage is normally limited. She says, “Once that time period expires, contractors need to be sure they have excess wrap-up coverage under their own insurance coverage.”

Mr. Noe emphasizes the additional insured aspect. He explains that the demands vary state by state and, depending on the geography, are a very big deal. He observes that, “In my experience, each carrier takes a different approach to the issue of additional insureds.” Another coverage to consider, according to Mr. Grandmaison, is ‘rip and tear’ coverage, which is needed but offered by only a few carriers. He states, “While we’re not looking to do it in every single deal we might get involved in, we are prospectively making the coverage available for the right situation.” Ms. Williams points out that agents should be aware of professional liability exclusions saying “The agent may have to obtain professional liability on a monoline basis.”

Capacity does not appear to be a major concern. The primary limits can be either 1-2-2 or 2-4-4 and excess limits up to $50 million are available. However, the limits provided and the premiums determined are based primarily on the type of bridge being built, the experience of the contractor, and the geographic location.

As indicated above, Inland Marine coverages are only a small percentage of the bridge contractors’ premium but the coverage provided is very important and can be difficult to place. Joe Tracy, chief underwriting officer for Travelers Inland Marine, notes that bridges have two key exposures—collapse and water. Mr. Noe observes that the recent flooding provides a good example of the concern over water. “The water comes up quickly and goes down quickly. In the meantime, you’ve lost your rebar, or your crane is sitting in a low spot and the water went up to the cab, which doesn’t do the electronics any good”, he says. Both agree fire must always be considered, particularly if the fire is caused by an accident beneath an overpass being worked on. Mr. Goldenberg adds this example, “In April of last year, the driver of a tanker truck filled with gasoline hit a guardrail on an overpass near downtown San Francisco and flipped the truck on its side. The tanker exploded and buckled a three-lane section of Interstate 580 and caused it to collapse onto Interstate 880 some thirty feet below. No one below was injured, and the driver walked away with some burns, but the incident caused major traffic problems for months until the repairs were finished.”

A final note to consider is a change in how road construction is financed. Most bridge projects today are designed and controlled by public entities and this means that bridge contractors have partial benefit of the sovereign immunity statutes. Recent public-private partnerships such as the Pennsylvania Turnpike might bring about a change in the industry. Mr. Grandmaison raises an important question. “If a private entity is going to come in and take over a highway for 20 or 30 years, is it going to be afforded the same sovereign immunity that a state department of transportation is usually afforded?” Mr. Tracy sees the benefit to these projects since money will be added to a strained system. “I think the privatization of our infrastructure is also going to have an impact as we see money flow in from some other sources because our government coffers might be a little lean at this point.” Mr. Brewer offers his insight by adding, “This presents some special and unique exposures that I think specialty carriers can best respond to.”