University of Hawai‘i Board of Regents approves in concept a system-wide Owner Controlled Insurance Program (OCIP)

University of Hawaiʻi
Carolyn Tanaka, (808) 956-8109
External Affairs & University Relations
Brian Minaai, (808) 956-7935
Office of Capital Improvements
Posted: Apr 16, 2009

HONOLULU, Hawaiʻi — At its monthly meeting held at UH West Oʻahu, the University of Hawaiʻi Board of Regents (BOR) approved in concept a University system-wide Owner Controlled Insurance Program (OCIP), which would cover improvement projects throughout the University. The administration was authorized to proceed with a feasibility study to investigate and evaluate the viability of establishing and operating a system-wide OCIP. It will then submit an informed recommendation to the Board of Regents for consideration and approval.

"The administration is optimistic that this program will provide greater comprehensive insurance coverage while realizing a significant savings in insurance premiums for all of the University's capital improvement projects," said Brian Minaai, associate vice president for capital improvements for the UH System.

The first step will involve retaining a consultant to assist with preparing a Request for Proposal (RFP) for the feasibility study. Once an RFP is prepared and issued an insurance broker would be obtained to complete the study. The administration will evaluate the study results and, if appropriate, submit an informed recommendation on creating a system-wide OCIP to the Board of Regents for consideration and approval.

The OCIP would strive to create a single comprehensive insurance program the provides Workers‘ Compensation, Employer‘s Liability, General Liability, Excess Liability, and Builder‘s Risk Insurance covering all contractors and subcontractors working on designated construction projects for the University.

The benefits of an OCIP over traditional insurance programs include: dedicated insurance coverages for University projects, lower insurance premiums due to bulk purchasing, consistency of insurance provided on each project, enhanced safety and loss control, and cost savings due to the elimination of contractor and sub-contractor mark-up on insurance costs.

An OCIP program was utilized for insurance in the construction of phase 1 of the John A. Burns School of Medicine and a $750,000 savings was realized. This was just under 1 percent of the $177 million JABSOM construction contract.

A system-wide OCIP has been successfully implemented throughout the University of California System. As of May, 2007, the University of California at Los Angeles realized a $22 million savings under its OCIP, or about 2.4 percent of $914 million in construction value, while the University of California at Berkeley realized a $1.1 million savings, or about 2.1 percent of $53 million in construction value.

It is anticipated that $482 million in construction throughout the UH system should be taking place within the next two years. At 1 to 2 percent of construction value, UH could possibly realize $5 to $10 million in savings if it implements an OCIP covering all system-wide construction projects.

The construction projects include:

UH West Oʻahu$140 Million
UH Mānoa CMORE$17 million
UH Maui CC Science Building$25 million
UH Windward CC Learning Center$40 million
UH Hilo Student Services$28 million
UH Mānoa Hale Aloha renovation$12 million
UH Mānoa Campus Center$40 million
UH Cancer Center of Hawaiʻi$180 million
                    Total UH Construction:$482 million

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