- Author
-
Witt, R. C.
|
Aird, P. R.
|
Brook, Y.
- Title
- Optimal Allocation of Insurance Related Risks and Costs in Construction Projects.
- Coporate
- University of Texas, Austin
- Report
-
Source Document 96
October 1993
330 p.
- Keywords
-
construction
|
insurance
|
costs
|
risks
|
risk management
- Abstract
- The commercial liability insurance crisis of the mid-1980's caused risk managers in the construction industry to realize that they could not make reasonably accurate predictions of future costs or the availability of liability insurance. This realization motivated the development of an Insurance Task Force by the Construction Industry Institute to determine ways to reduce the total cost of risk associated with construction projects in the future. Chapter 1 examines this price and availability crisis by exploring the possible explanations for the dramatic changes in the liability insurance marketplace. Chapters 2 and 3 provide a review of basic concepts and definitions related to risk management and insurance in order to provide a conceptual foundation for the study. Chapter 4 provides a foundation for understanding and showing how insurance rates are determined in competitive markets. Chapter 5 examines the economic role played by insurance companies in the economy and construction industry. The various markets in which insurance can be obtained are evaluated in Chapter 6. In Chapter 7, economic aspects of the various insurance markets and alternatives are discussed. Specific aspects of risk management in the construction industry are examined in Chapter 8. Chapter 9 examines the economic nature of risk allocation in the construction industry. Contractual risk transfer is very common within the construction industry. Hold-Harmless agreements are discussed in Chapter 10. Chapter 11 is devoted to specific aspects of insurance within this industry. Chapter 12 addresses a variety of insurance-related issues. The results of the insurance surveys sent to CII members are summarized in Chapter 13 through 15.