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History
- Referred to insurance
- Print number 4952a
- Amend (t) and recommit to insurance
- Referred to insurance
Full text
The text isn't available here yet. Check nysenate.gov.
Sponsor's memo
BILL NUMBER:S4952A
Title of bill
An act to amend the insurance law, in relation to authorizing any city with a population of one million or more to provide wrap-up insurance programs and surety bonds for their public building and construction projects; and providing for the repeal of such provisions upon expiration thereof
Summary of provisions
This bill amends Insurance Law §2504(b) to permit any city with a population of one million or more and others acting on their behalf (such as a construction manager) to procure wrapup insurance or surety bonds when such insurance or bonds could be procured by contractors and subcontractors. It also adds new language to §2504(b) to make clear that any city with a population of one million or more, or others acting on its behalf, may provide such wrap-up insurance or surety bonds without reimbursement from the contractor or subcontractor, and also may require that a contractor or subcontractor account for, or otherwise provide a credit in his or her bid that reflects, the amount the bidding contractor or subcontractor would otherwise add if he or she provided his or her own insurance or bonds as required in the bid specifications. The bill also provides that any city that provides such surety bonds or insurance policies shall do so only for projects that are subject to a project labor agreement. The bill will take effect immediately and will expire and be deemed repealed five years after the effective date, except with regard to those contracts for which a solicitation was issued within five years of the effective date.
Read the full memo (637 words)
Justification
This bill has been requested by the New York City Office of the Mayor. For most large-scale construction projects, it is best for all concerned - owners, contractors, workers, and the public for insurance to be purchased through a single insurance "wrap-up" program (known as an Owner-Controlled Insurance Program, or OCIP, if bought by the owner, or a Contractor Controlled Insurance Program, or CCIP if bought by the construction manager or general contractor). A wrap-up covers everyone involved in the project, including the owner, all contractors and subcontractors, and all workers, thereby making unnecessary the multiple insurance policies each project participant would otherwise have to purchase on its own. In doing so, it centralizes project safety programs (protecting the safety of workers and the public) and eliminates wasteful litigation among participants and their insurers to decide who pays a single claim.
By reducing these transaction costs, wrap-ups save a significant amount of money - according to a study by the Federal government, "up to .50% of the cost of traditional insurance, or from 1 to 3% of a
project's construction costs." This saves taxpayer dollars and allows public funds to go further, increasing the number of construction projects and jobs. Wrap-ups also assure that the planned-for insurance actually exists when a claim is made and often allow claimants, including workers and the general public, to be paid faster and more easily.
Finally, wrap-ups facilitate the market entry of emerging small businesses and minority and women-owned businesses (MWBEs), which often have limited access to the insurance markets. Small contractors, including MWBEs, can be chosen by construction managers based on their ability to do the work rather than access to insurance.
For all these reasons, wrap-ups are routinely used in large-scale construction projects throughout the private sector. They are also used in government projects around the country and, in New York, in billions of dollars worth of projects undertaken by public authorities that are exempt from Insurance Law § 2504(b)'s prohibition on wrap-ups, notably the Metropolitan Transportation Authority, the School Construction Authority, and the Port Authority of New York and New Jersey. Insurance Law §3504(b) currently restricts the State, other public authorities and public corporations from using wrap-ups. This should be repealed.
Effective date
Immediately.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.