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Subcontractor Default Insurance

Willis Towers Watson continues to be a brokerage leader in Subcontractor Default Insurance (SDI), a market we pioneered with our SDI policy.

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Willis Towers Watson developed the concept and launched the first subcontractor default insurance (SDI) policy in North America over 20 years ago to offer a risk management alternative to traditional surety programs. Since then, many in the construction industry have implemented SDI programs to ensure risk on their construction projects is transferred successfully.

Since the initial program release in 1996 known as Subguard, the SDI market has grown to include many of the leading construction carriers globally. Today's SDI market offers numerous solutions which allow contractors more flexibility and levels of coverage than ever before.

The SDI policy is a tool that general contractors, prime contractors and construction managers (contractors) use to insure the risk of loss associated with the failure of their first-tier subcontractors. Contractors take on enormous risk of loss by engaging subcontractors for the performance of work on their projects. If a subcontractor fails to perform under the terms of its contract, contractors may be negatively impacted by: rework, resequencing, project delays, increased costs and a damaged reputation. SDI's blended approach maximizes the benefits of risk transfer (bonding) and risk acceptance (SDI), creating a well run risk management process that can positively impact a contractor's bottom line.

The Willis Towers Watson Default Insurance group is recognized throughout the industry for our knowledge, training and dedication to client success. Our team creates strategies that align individual client methodologies to drive cost-effective results by using SDI, an increasingly popular risk transfer product. We educate our clients on technology shifts, subcontractor prequalification solutions, policy evolution and overall best practices to develop risk management solutions.

Why Willis Towers Watson

Our dedicated team of specialists provides a turnkey solution for managing the potential financial implications of subcontractor default, guiding you through the entire process.

  • Assessment of a general contractor's readiness to take on the responsibility and the administration of a successful SDI program. Our team understands the evolving best practices around subcontractor prequalification, selection and management that leads to the terms and pricing for SDI underwriters.
  • Assessment of how SDI would apply to the contractor's market segments, geographies, procurement methodologies and risk management goals.
  • Analysis of carrier quotations and negotiation of a program tailored to complement a contractor's risk appetite.
  • Critical review of policy terms and conditions to ensure our contractor clients are receiving the coverage with manuscript solutions to meet their specific business needs.
  • Assistance in the development of our contractor clients' strategy for implementation of the SDI program and achievement of loss reserve levels for retention funding goals.
  • Dedicated program administrators that work with the carriers to ensure timely enrollment, reporting and documentation of program exposure. We seek to achieve an enrollment and billing process that helps result in cash flow to the contractor.
  • Assistance from dedicated claims specialists experienced in managing SDI claims. Our team provides claims advocacy for clients to keep the claims process moving forward and helps keep any impacted projects on schedule.
  • Analysis of critical subcontractor prequalification, payment, procurement and project management information systems and databases to ensure the information driving risk management analysis and SDI enrollment is adequate and accurate.
  • Engagement of our forensic accounting expertise to provide assistance for the documentation of very complex claims scenarios.
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