Debate over the perceived benefits of consolidated insurance programs (CIPs) also known as controlled insurance programs and more popularly referred to as "wrap-ups" - has evolved over the past several decades into one of the hottest, most contentious issues within today's construction

industry. Originally designed to reduce overall insurance costs on very large, single-site projects involving significant labor and considerable workers' compensation premium costs, wrap-ups have changed creatively and are now applied to a variety of project sizes and types of construction. While

affecting a high number of contractors and subcontractors, wrap-ups have become widely regarded as perilous for subcontractors and particularly so when used on smaller scale and multi-site projects, aka: "rolling-wraps". Public works projects and their public owners are not immune to wrap-up

problems.

In simple form, a wrap-up is a centralized insurance and loss control program intended to protect the project owner, prime contractor, and subcontractors under a single set of insurance policies. While the wrap-up concept is not new to construction risk financing, there has recently been a proliferation of variations in plan design making many contemporary programs comparatively new insurance models. It is important to note that all wrap-up programs are a radical departure from the traditional construction insurance format, where each contractor and subcontractor individually purchases and negotiates its own insurance and risk financing programs to address liability and losses from accidents. Unfortunately, wrap-ups are too often marketed inappropriately as providing the same or better insurance coverage, at the same or lower financial risk and cost to subcontractors, as their own individual insurance programs offer. Wrap up design seems too focused on profit for program sponsors rather than providing the coverage necessary to protect subcontractors and creating a financial backstop for construction buyers that experience challenges arising from defective construction, injuries and other accidental loss both during ongoing construction operations and long after completion.

Ideally, a wrap-up will provide sufficient limits of fully paid commercial general liability, workers' compensation, employer's liability, pollution liability, professional liability, excess liability and even coordinated builder's risk first party property coverage for all enrolled program insureds and for the entire construction process and including the full term until statutory repose of the completed operations hazard period.

Today, many subcontractors that have experienced owner-controlled insurance programs (OCIPs) or contractor-controlled insurance programs (CCIPs) have come to realize all wrap-ups are indeed not ideally created with equal protection and transparency. Wrap-ups are rarely as comprehensive and coordinated as the sponsor implies. In fact, many wrapups offer inadequate and limited coverage, often employ burdensome procedures for subcontractors that can significantly amplify exposure to risk, increase administrative costs and paperwork, and generate problematic outcomes. From a subcontractor perspective, as the use of wrap-ups has spread, so has the controversy surrounding them.