Why Infrastructure Insurance Matters for Corrosion Professionals

Tony Serdenes of GPI; Nick Kuntz of Alliant Insurance Services, and David A. Scotti of Scotti Law Group. Photos courtesy of the panelists.

As part of a new task force, the Association for Materials Protection and Performance (AMPP) is bringing together stakeholders from many roles to help understand the relationship that corrosion engineering and protective coatings systems have within the infrastructure insurance industry.

In a recent roundtable conversation, three members involved with that task force — GPI’s Tony Serdenes, Nick Kuntz of Alliant Insurance Services, and David A. Scotti of Scotti Law Group — shared their perspectives on challenges and best practices that could benefit those involved in designing, specifying, supplying, and performing those services, specifically as they relate to insurance and risk management.

The discussion also explores various paths that AMPP can take to address those challenges, as well as ways in which the industry can work together to develop best practices for risk management and insurance needs. 

Read on for a partial Q&A transcript, and listen to the full episode online at www.materialsperformance.com/podcasts or at the embedded link below.

Q: Why was this infrastructure insurance task force committee formed?

Serdenes: Basically, it’s about bringing together a group of industry professionals. This will include owners, both public and private, as well as consultants, insurance professionals, contractors, and manufacturers.

One of its main purposes is to better understand and better verbalize contract documents. The insurance requirements are needed from the owner’s perspective and from the contractor’s perspective as well.

I started in the construction industry in the 1980s, as a contractor, and then as an inspector in the early 1990s. … With GPI, I’m the corrosion protection pursuits leader. I travel around the country giving presentations on bridge preservation through coatings. I’ve now had 35 years in the industry, with the majority of that working with DOTs [Departments of Transportation] and the bridge industry.

Now, I’m the co-chair of this task force committee. I bring a little bit of experience from all aspects of the industry, so that helps me to be a facilitator for this committee.

Kuntz: In working with Tony and other folks at AMPP, and speaking with David [Scotti] and a lot of our clients … I’ve found there’s a need for this committee, and particularly all the stakeholders that are involved. Until this committee was formed, there really was not a forum from which they could work together to try to make all their lives easier.

That’s really what we’re working towards. This is a unique opportunity in that all the stakeholders can benefit. They all can voice their concerns, and they all can collectively find ways to make it easier to achieve their outcomes.

Q: Tony, from an industry perspective, what is your view of contract language and its importance?

Serdenes: We want to make sure that the language is clear and understandable. Not just from what the owner puts into a contract, but also that a contractor actually understands the role, their specific requirements, and what needs to be done … and bidding it accordingly to that language.

Kuntz: That needs to be part of the bidding process. You need to understand that language in the bidding process.

Insurance companies are typically very good about adopting language … if you ask when you’re getting the job, and say, “Hey, we need to alter this language slightly.”

But if you wait until after a claim comes in, they’re not going to change and accept that claim. They’re going to find any reason not to accept it. So, any contractor right now that doesn’t have a process in place to review their contracts … they’re really playing with fire. It’s really a frightening place to be.

Based on the scope of work that you and the owners are working for, and the type of coatings work you’re performing, your process is going to be a little bit different. But you need to have a process in place, and it needs to really have all the right stakeholders involved.

Podcast screencap via <i>Materials Performance</i> (<i>MP</i>) Interview Series.

Scotti: Following up on what Nick said, I think you want to review the contract. I know it’s terrible reading, but if you have a claim, the reading is going to become something that you’re going to be very focused on. So, you may as well focus on it at the start. Then, hopefully you can leave it in the drawer and don’t have to go back to it.

You want to look at who you’re indemnifying, and what kind of warranty you’re giving. There’s the length of it, and the scope. You want to look out for waivers.

One trap that people fall into is when they file for their pay application, there will be a lien waiver attached. Owners have gotten to a point where they add to that waiver language … to where you can waive all your claims up until that date.

If you’re not careful, you could end up in a place where at the end of a job, you have a lot of loss and extra labor that you want to charge for, but you’ve given it up … just by trying to get your money as you go. So, you need to pay attention to what’s in there.

Also, what if there’s change in conditions? If the steel you have to coat is not in the condition you thought it would be, or if the surrounding environment is suddenly much more complicated, you have to make sure that you look at that and address it. Because as Nick says, the honeymoon period is before you start. That’s when everybody is wanting to get together and make things work. That’s the best time to address these issues.

Q: What role can AMPP play when it comes to supporting the industry on an initiative like this?

Serdenes: They can give the proper verbiage to put in contract documents. With qualified contractors, QP1 and QP2, and properly trained inspectors, workers, superintendents, and those type of things… they can provide that type of documentation, and even define it, for those owners. These are critical resources.

When an owner uses or states certain things, as far as levels of surface preparation for coating systems, those are often referring to AMPP standards and guides, and all of those type of things. It would be no different here, when it comes to adding specific language.

Kuntz: It’s kind of unique in that, what is a qualified contractor? You may be qualified to do the work. But if you don’t carry the correct insurance limits, and you can’t navigate that contract, are you really a qualified contractor at that point?

So, I think the definition of qualified contractor is evolving. The types of contracts you’re able to consume are really going to make a big difference. Do you have the right insurance? Are you able to safely perform it? Are you able to achieve all the objectives in the specified timelines? Those are all part of being pre-qualified.

Comments from these panelists were made on a recent episode of the Materials Performance (MP) Interview Series. To check out the complete episode, listen below.

Editor’s note:
For those attending the 2024 AMPP Annual Conference + Expo in New Orleans, Louisiana, USA, Serdenes and Kuntz will lead the “Insurance Task Force Roundtable” session on Tuesday, March 5, from 2:30 p.m. to 4:30 p.m. Central time in room R01.

If you are unable to attend the conference but would like to reach out to any of the panelists, they can be contacted on LinkedIn or via their company websites (linked above).

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