Taking a Bold Hold on Risk Management: Q and A with Clay Shelton, KA Insurance

Over time, I investigated and analyzed other insurance strategies that had not been selected for implementation. I also worked closely with KA Development as it grew. Because development teams are not necessarily insurance specialists, we looked for insurance and risk-management products that supported growth plans and protected against unexpected losses.

How did you work with the KA safety team and subcontractor teams?

CLAY SHELTON: I was a strong supporter of safety professionals at KACC and KA Insurance. They were encouraged to support one another in their work.

KACC personnel saw KA Insurance clients on KA jobsites. I asked Jay, Jake and Ethan to contact KA Insurance when they saw one of our customers ignoring or resisting expected safety standards. Conversely, I asked Troy, Neil and Sara to contact KACC when they observed safety concerns at a KA jobsite.

This mutual agreement to support one another benefited all parties and reinforced the work of Kraus-Anderson’s safety department and annual Safety Week.

How did KA’s low EMR provide advantages for KA, clients and business partners?

CLAY SHELTON: KA’s low Experience Modification Rate, or EMR, resulted from increased emphasis on the safety of employees and all workers at KA jobsites. A commitment to safety, combined with proactive claims management, led to a strong EMR.

This helped manage insurance costs and support competitive bidding. These benefits were a byproduct of the most important result: workers went home to their families in the same condition in which they arrived at work.

Talk about Subcontractor Default Insurance and its impact.

CLAY SHELTON: Subcontractor Default Insurance, or SDI, helped transform KA’s subcontractor management approach. We used SDI on as many jobs as possible.

The biggest operational change was prequalifying subcontractors that worked on SDI projects. This included reviewing a subcontractor’s financial condition, commitment to safety and dedication to quality during the contract-award process.

Subcontractors that passed these evaluations could work on the job without special conditions. For subcontractors that did not score well, we implemented risk-mitigation plans or required surety bonds. This increased confidence that subcontractors could perform on time, within budget and in alignment with expected quality and safety standards.

What was your role in developing KA Insurance’s cost-containment approach?

CLAY SHELTON: KA Insurance had always provided critical services through COMPTROL, claims management and safety leadership. When we purchased Minnesota Insurance Brokers several years earlier, we combined those services with its private customer portal, which organized clients’ workers’ compensation information.

This helped clients take a more formal approach to managing workers’ compensation results. We supported many clients in lowering their EMR.

Talk about your involvement in KA’s joint-venture contracts.

CLAY SHELTON: Over the years, KA entered into joint ventures with several partners. We found that KA generally had a stronger understanding of insurance and risk-management issues than many partners. As a result, we often took the lead in designing project insurance standards that reduced risk for both parties.

Appropriate insurance selection also reduced the likelihood of disagreements with joint-venture partners, which benefited everyone involved.

How did you assist with KA’s subcontractor prequalification process?

CLAY SHELTON: My contribution involved developing the process and identifying the information needed. Anne Filas and Spencer Williams conducted the analysis, with oversight from Logan Carter and John Rogoz.

What risk-management trends were on the horizon, and how was KA Insurance anticipating them?

CLAY SHELTON: The construction industry had focused on safety for many years through jobsite rules, new-employee orientations and regular safety discussions. A more recent trend was applying a similar level of attention to quality issues.

Quality issues can result in costly insurance claims and legal expenses. They can also affect the reputation of everyone involved. Responsible contractors were increasingly dedicating resources to avoiding quality problems. This included documenting work and conversations with architects and engineers, understanding the work to be built and performing inspections throughout construction.

For related perspectives, read about construction risk and insurance considerations, understanding captive insurance programs and insurance considerations for architects and engineers.