Put an End to Shifting of Risk

by Walt Bazan Jr. 

Walt Bazan Jr. is president of Bazan Painting in St. Louis. He is National Presisident of the American Subcontractors Association. 

One recent morning, I met for several hours with a risk control analyst for a major insurance company. Our conversation ranged from the subcontract my company uses when it hires a subcontractor (it's a ConsensusDocs document, by the way) to the rationale for requiring others to name my company as an "additional insured." As a long-time supporter of ASA's advocacy efforts, I'll admit that when the discussion turned to "additional insured," I became somewhat upset. In the end, the conversation made me remember why I, like so many others ASA members, am committed to working through our association to limit inappropriate risk transfer. 

What made me upset? During our discussion, the analyst made a point of recommending that my company require its subcontractors to name it as an "additional insured." In and of itself, that didn't surprise me. I explained that I understood that the recommendation was routine ... but it still made me angry. Why? As a subcontractor, I understand what it's like to have to promise to indemnify, hold harmless and defend other parties - GCs, CMs, architects, developers, etc. - against virtually any conceivable problem, including damage caused by someone else's negligence, even their own negligence.

Anyone who's had to accept such wholesale risk-shifting knows that it stifles growth, forcing firms to pay to insure and defend others against actions or mistakes they can't reasonably control. Ideally, at each tier of construction, each party should take responsibility for the risks it can control at least cost.  Because of my involvement in ASA, I know that some states have achieved this ideal through legislation prohibiting certain types of hold-harmless clauses and closing loopholes that allow such prohibitions to be circumvented through "additional insured" requirements. My chapter, the ASA-Midwest Council, has been working to eliminate the additional insured loophole for several years, and we will continue to do so.

We're using the strategies and fixes we've learned from ASA and other chapters to make progress.

The key to limiting risk-shifting, or achieving other legislative reforms for that matter, is being familiar with the solutions, understanding the legislative process, and persevering. I've learned this lesson through ASA, especially at the ASA Champions Academy, which includes workshops specifically designed to help chapters with their government advocacy programs. (I've also learned an awful lot by sitting in the bar or sharing a meal with a fellow member after the workshops!)

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