All right. Hi, everyone. Welcome to Inland Marine Underwriters Association's class, Builder's Risk, Water Damage, and Hot Work. This is an Encore class that was first offered, or last offered, in 2019. I'm Lillian Colson, Vice President and Secretary at IMUA. And I'm thrilled to introduce today's class. Thank you to our esteemed presenters, actually instructors for this class, Dustin Jones and Robert Allman, for taking time out of their schedules to prepare and instruct this class. Additionally, thank you to my colleagues Eileen and Abby Monreale for coordinating today's class with our presenters. And last but not least, thank you to everyone who's joined us today. We have strong attendance, with over 260 registered for today's class. And we look forward to sharing and learning together today. It's great to connect for education as we start a new year. IMUA is utilizing a new platform, GoToWebinar. This is our first time launching this platform, so we especially look forward to your feedback on this platform. We'd like to hear your thoughts about it, and any ways that you think that we could improve. We'll send a survey out after this class to follow up with you on that, and to allow you to share your thoughts. This class is approved for three CE credits in New York, New Jersey, Texas, and Virginia for those with licenses in those states. If you require the credit, you should have received a form that I sent along with the class handout. You'll fill out the form, and then click Save, and then return it to my colleague, Allie. Okay. Along with that form, you will also use a code. The first code today is 0331. That's 0331. Before we start, we have a couple of quick housekeeping items to review. To help reduce strain on your local network, we suggest that you close any unnecessary browsers and Internet-reliant programs. This will help enhance your experience. You'll find your attendee control panel on your screen, and that will minimize by default. At any point, you can see the orange arrow icon, and then simply click on that icon to uncheck the auto-hide option. So that's what you can use, and that's where you'll use that control panel to type in questions or to raise your hand to ask questions. Our instructors will announce two 10-minute breaks today, probably at around 10.50 and 11.50 a.m. Eastern time. If you have any questions for your instructors, as I mentioned, there's two ways to do that. You can use the Q&A box to submit your questions, or you can raise your hand. At the appropriate time, we'll answer the questions, and we'll open up your mic so that you can ask that question. And then after you finish asking the question, we'll mute your microphone again. To encourage your participation today, at the end of the class, we will ask Dustin and Robert to each select the two most engaged attendees with the best questions or engagement. And who doesn't love the combination of learning and competition? So we look forward to you being very involved and engaged today. Please be aware of the IMUA statement. Okay, it's my pleasure to introduce today's instructors. First, we have Robert Allman. Robert Allman is a loss control specialist with Great American Insurance Group. He is also the captain with Babylon Fire Department, and he's worked in firefighting as a fire officer, a fire prevention and public outreach with Babylon Fire Department since 1989. Robert is a certified fire specialist and holds the ARM designation. He earned a bachelor of business administration from Dowling College and an MBA in business management and economics, also from Dowling College. Robert worked as a large account coordinator with Utica National Insurance for 21 years, and he brings a vast amount of experience and knowledge in both insurance and fire professional experience. Dustin Jones is AVP and underwriting manager of North America Marine at AXA XL. He earned a bachelor's of arts in journalism and a master's degree from the University of Central Oklahoma. He holds the construction risk insurance specialist and construction health and safety technician designation. He is a member of IMUA's construction committee. Dustin is also a founding member and chairperson of IMUA's Chesapeake Regional Advisory Committee. Dustin has taught many classes for IMUA and webinars and has been a past annual meeting presenter, and we're very fortunate to have him today. He was, in 2016, awarded with the Excellence in Education by IMUA, which is a testament to his knowledge and what he's given back to the insurance industry. Welcome, Robert and Dustin. And now I'll turn it over to Dustin to begin with water damage session, and then we'll go to Robert for hot work. Thank you, Lily. So if I can work the presentation here. So we're going to kick it off with a poll. And hopefully that shows up. You can see that. Yes, give me one second, because the technology is new for us, and I just want to make sure I can launch this poll. Um, poll, hold on one second. Here we go. Give me another second, another button for me to hit. There we go. So the question is, have you ever experienced a water damage claim on a construction project? And we will give you a few seconds to respond. I see the answers coming in. That's great. Keep going. Give a few more seconds. OK, I will close, and I will share. So there are your polling results. Yeah, so 65% saying yes, they've experienced one. I think that's probably up from the last time we've done this, which I would kind of expect at this point, given the state of the builders' rights I would kind of expect at this point, given the state of the builders' risk market and how busy it was in 2018, 2019. So I'm not surprised. I will start this off by basically stating that I don't consider myself an expert on this topic, but I do consider myself to have been introduced to this topic by drowning in water damage claims. So this, for me, started becoming an issue in about 2018 or so, whenever some of my builders' risk projects were coming to that final stage of completion. And all of a sudden, it was like literally the floodgates opened, and I was just inundated with water damage claims. Forgive the puns there. So this has been going on for me since late 2017. I really started tackling the issue because I was panicking about the losses that were flowing in to the builders' risk policies that I had on the books at the time. So I really started digging in, what in the world is going on? Why is it happening now? And what can we do? What can we do about it? I was not the only one experiencing these issues. So as we all know, misery loves company. So I had seeked out some other people to try to find out what they were experiencing and what was going on. So really, this presentation is something that's been kind of an ongoing play for me. Basically, I have been working this issue for a long time. And I've learned a lot since the first time I presented this topic about what you can actually do as an underwriter to push the issue and try to get it in front of everybody and what it takes to actually start resolving the problem. So anyway, I will start with some updated statistics. I think the last time I did this, I had 2016 statistics or 2017 statistics, I believe it was. And during that time, water damage was really showing up. And these are ISO statistics, by the way. So what I would say about these is they're a good representation of what's going on. But like anything, it's garbage in, garbage out. So it's really just a snapshot of what's going on. And it is interesting how things have evolved over time. Now, I just picked a few of the lines in Builders Risk, which were apartments, institutional facilities, offices, and mercantile. So those are the lines that I chose. There's petrochemical. There's manufacturing and other things that I didn't dig into because this is, for us in particular, and I think for the mainstream Builders Risk market, that's where a lot of these losses are occurring. So it is interesting. So the frequency has gone up. Water damage is still number one. But you will see, based on the prior statistics versus the new statistics, that water damage frequency has increased dramatically. Theft is still number two. But wind, storm, and hail has jumped in there at number three, which it was not before. Severity, which includes the total incurred costs, in apartments, water damage is number one for the total severity. That's the total number of losses over the entire industry, not necessarily the severity of each individual claim, which I will get into in a little bit. And in apartments, water damage is number one. Fire, lightning, it's all combined in the same category as number two, which you would expect to be in there somewhere, given the wood frame construction of apartments. Institutional, this year, wind, storm, and hail was pretty significant in the institutional side, which I'm assuming is hospitals and government offices and schools and things like that. And then water damage is a close number two. Offices, water damage was number one. And again, there's wind, storm, and hail, which was not in the prior statistics as number two. And then the mercantile is water damage one, and then fire. So we have another poll, I guess. All right, Destin, let me bring up the second poll. In your opinion, is water damage the new fire? And again, we'll give you a few seconds to respond. So everybody's heard this by now, that water damage is or is not the new fire. I'm just curious as to your opinion about it. All right, I will close that poll. Hopefully, we've had 81% of the attendees voted, so close. Yeah, so overwhelmingly, we definitely are seeing water damage. It is a significant source of pain for us that right builders risk. And I believe we did this presentation in 2018 at the annual conference. And at the time, it was interesting because a lot of folks at the conference had not yet experienced a water damage claim. Now I'm trying to move the slides forward and see what happens here. I think if you click on it, it'll move forward. Sometimes your mouse has to engage again by clicking on the slide and then try again. Yeah, I'm not sure I have control at the moment. Try clicking on it. Click on the actual slide and then hit your arrow. I am. There it goes. OK. So at the time, a lot of folks, there were some new entrants into the In the Marine game. And some of those new entrants had just started writing builders risk. And they had come up to me after the presentation and basically said, we're just not seeing this. And we haven't seen this kind of stuff. And I said, this is the beginning of your writing. I said, when you're towards the end of your project, then come back to me and tell me. And I think what we've seen is that a lot of those folks have come back and said, holy cow. This was much worse than anticipated. And so I think while that has been out there for a while, water damage is the new fire. That's the cliche thing to say. I think there is some truth to that. And we're going to delve into it a little bit more here. But this is, again, more ISO statistics just showing you the loss distribution from the ISO information. And that loss distribution is basically the number of dollars. This would tell you the number of dollars by percent. So you can see that in apartments, institutional offices, and mercantiles that water damage is making up a large proportion of overall incurred losses. And although they may not be as severe as an apartment fire, a single apartment fire, the frequency and overall severity to the industry is significant. For example, we have in apartments, as you would expect, the average severity for a fire in an apartment is 1.3 million. But the claims distribution or the frequency is only 9%. So while the severity is huge, the frequency is not there. Now, they do make the news, and water damage losses do not typically make the news. In comparison, the average cost of a water damage claim is now $378,000 and accounts for that 45% of the frequency. So pretty significant difference there. And although you're having the $1.3 million fire loss, on average, for severity, they're not as frequent as the $300,000 water damage claim. And I would say, since I've been following these, the cost associated with these claims has risen dramatically. I have seen a major uptick. What we used to see is maybe a maximum of $100,000 claim. They're now $1 million claim. And it's been really interesting for me to dig into the claims information and see why that is, what is going on here to make these claims so much more expensive. And we'll get into that a little bit more. So this is your fire frequency broken out by the percentage and the severity line, so just for illustrative purposes only. And then here's your water damage. So you see the average cost of a water damage claim for each of these classes. Apartments is $378,000. Institutional is $132,000, $133,000, and so on and so forth here, with the mercantile being the lowest at $211,000 average cost per claim. Now, again, this is ISO statistics, so it may not completely track with what you are doing or what you're seeing out there, but it is indicative of the industry, and it has increased dramatically. So here we have a case study where the GC contracted to build a new building. The roofing contractor working on the roof does not properly install the roof connections. Rain occurs, leaks in, and causes a huge amount of damages. This is a real claim for me. In fact, this claim is still not closed, as a matter of fact, and it has exceeded this number. Roofing contractor admitted fault early on, filed a claim with the GL carrier, and in the meantime, before anything gets filed to the builder's risk carrier, they filed it with the GL carrier, roofing contractor just hires cleanup crews, mitigation crews, mold crews, and completes repairs that cost over a million dollars. Well, then the GL carrier denies the claim. Why? If anybody wants to jump in and answer that question, if you're brave enough to pop in on the comments, please feel free, otherwise I will move on and kind of give you my explanation here. So I'll give you a couple of seconds here, if anybody's brave enough to jump in. And feel free to jump in and ask questions at any time, or offer your insight, obviously. Like I said, I'm only an expert at this by way of having a ton of these claims, which often makes you one. So anyway. Dustin, someone said, wouldn't that be a leg two claim? Thomas, Thomas asked, wouldn't that be a leg two claim, sorry. So resultant damage on a builder's risk policy. Well, it depends on if it was, you know, considered faulty workmanship and all that, and you have to determine all of that stuff, I guess. You know, the contractor admits fault, and, you know, I got to admit, a lot of these, if you guys, and if I have any claims people on the call, I'll apologize now. But let's just, the reality is that, you know, there's some risk factors with adjusting claims, and you know, some carriers are more aggressive at pursuing than others. And honestly, it can vary on a claim, how it's resolved based on your claims team. So it could be resultant damage from that, which is, you know, that's number one, a very real possibility, and is actually what happened here. However, why did the GL carrier deny the claim that the roofing contractor, they caused the damage, it was their negligence that caused it. So, and here's why, because there's a builder's risk in place. And as long as there's a builder's risk in place, it's designed to be no fault. And as long as the broker has done their job and added, you know, the owner of the GC and the subs of all tiers, including, you know, everybody named on there, and there's a waiver of subrogation, then the GL carrier is going to invoke its other insurance clause, which basically says that if there's a builder's risk enforced, they're not going to pay the claim. Now, I will tell you, there have been many instances where a GC has told a subcontractor that you are going to pay for this claim, and they filed it with a GL carrier, and the GL carrier paid the claim. So that has happened multiple times. I will tell you, it is getting much less frequent than it was in the past. I think the GL carriers are onto the game, but there was a time when GCs waived a lot more power because the subcontractor needed them more than they needed the subcontractor. So we go back to the contract, and I think it's really important that we understand what these contracts say, and they are all over the place, as you might imagine. There's AIA contracts, and then there's a whole host of a variety of different kinds of contracts. The GL carrier, a good, savvy GL claims person is going to ask for a copy of the contract between the owner and the GC, and they're going to look, and they're going to say, you know, the GC is required to carry the builder's risk policy, or the owner, whichever case it may be. But if it's the GC, they're going to be required to carry the builder's risk policy, and they're going to have to name and waive everybody. And so that's when you've got to see, okay, whose interests are covered, who are the named insureds, and that goes back to adding everybody as an additional named insured on policy. So I could choose from probably 30 different losses that have occurred to me since I've been dealing with this, many, many more than I would like. But I'm just going to go through a few here, and just give you some examples of some of the costs that are included in these kinds of things. So this particular loss was a dormitory in Maryland, 15 story, renovation, they're, you know, basically tricking out the old dormitory, making it more desirable for the students. Plumbing contractor installs the wrong size coupling on the domestic hot water line, on the 12th floor, of course, couldn't have been the first floor, had to be on the 12th floor. The actual coupling, ironically, held through pressure testing for two weeks. And then, of course, on a Friday night, it came loose, and started pouring water everywhere, and went undiscovered until Monday morning, which is so often the case with these. Otherwise, I guess they wouldn't be as big a claim and make as much, you know, of a stink. So Monday morning, we've got damage to basically the 12 floors, the 11 floors, the 12th floor and then 11 floors below it, two weeks from being turned over to the university, which is so often the case on these things, it's for just at the finish line here. Oh, okay, that must have been my computer. Anyway, sorry about that. So the, as I mentioned, the coupling last couple weeks, and then survived pressure testing before failing. And this was $615,000. And this is the actual picture of the coupling from the claim file. Yeah, it's just, I mean, this is clearly negligence from a plumbing contractor. This again was one where they admitted fault, filed a GL claim, GL carrier came back and said, yeah, no, there's a building risk in place for a reason. And so, yeah, we paid the $615,000. This claim here is part of an interesting claim as it was a vandalism case where a group of thieves came in to steal copper. Well, they decided to cut a bunch of water lines that were already on in a school. Now, fortunately, it was a school, it was a, you know, just a two or three story school. And so the damages were in the $250,000 range. However, the issue with this one was actually what the GC did. And I'll talk about that a little bit later. So here's another one, water damage, existing portion of a renovation, and you'll hear a recurring theme here, renovation and multi-story and, you know, habitational, residential, all of those things where there are multiple plumbing connections, which is usually, you know, plumbing somehow involved in most of these losses, not all obviously, but a lot of them. Water pipes in the ceiling of the seventh floor froze, which, you know, certainly something we could see now, you know, given what's going on in the Northeast and other places. So water damage to the ceilings, the walls, the hardwood flooring, which is very expensive. From the seventh floor down to the second floor, two bedroom apartments, buckling of the hardwood flooring in these apartments. Now, these were rough looking apartments. Somehow or another, it was only $150,000. I don't know where the bulk of that went, but here's some of the tear out that had to be involved. And that's something that, you know, we'll discuss a little bit. I'll show you. Why is it so expensive to do all this stuff? And I mean, you're talking about, we've had claims where mold remediation, you know, you've got a sublimit for mold, but depending on the jurisdiction, you can get pulled into paying more for mold remediation and other things than you think you have. It's been interesting to see. All right, let's see if it's going to move. I'll take this time while I'm trying to move the slide forward to see if there's any questions out there. Lily, is there any questions? So there, I mean, there were a lot of comments going back to that case study that you shared. I'm trying to... I'm trying to advance the slide, but it's not cooperating. It's not cooperating. Go ahead, Lillian. So it says, because the carrier did not have a chance to inspect or investigate the damages, you know, like I said, this is going back to the case study that you shared. Yeah, and that's absolutely the case. And that's something that I mentioned. And that was Brian Robinson. Yeah, no, that's a very, very valid point. And that was a very big problem with that is, like I said, they, you know, I could have gotten in a little more detail on that. They spent a million dollars bringing in whoever they wanted to bring in. And we didn't have a chance to look at it before all of that work was done, even. And so, like, you know, RGC said, well, we thought the roofing contractors, GL coverage was going to pay for it. And like I said, I mean, this thing's been open for a long time, and it's just now coming to resolution. And it's over a million dollars. It's still right at that million dollar plus mark, even with, you know, decent sized water damage deductibles. So we've learned a lot about a variety of these things, and that is absolutely the case. And we've tried to educate RGCs that, look, you've got to let us know, even if you think the, you know, you think the subcontractors, GL coverage is going to pay. Well, I'm here to tell you, it may or may not. Would be if it does, but I'd be surprised if it actually does. And Gina said- This is enough. Go ahead. Okay. And Gina said, because the builder's risk is first party, also the AIA contract supersedes. So those are her comments. And that's correct. And that's why I say it's very important. I got it. You know, you've got to educate everybody to go to the contract. What does the contract say? And it's been interesting because there are sometimes where the GC has been stuck with the claim and actually covered the builder's risk when the contract says the owner is going to supply the builder's risk policy. So, you know, they're not, they're not foolproof. And they're not always followed the way they're supposed to. And keep in mind, there's also a contract between that GC and the subcontractor. And they may have different terms and conditions with the subcontractor, but they're going to go back to that main contract at the end of the day. So the GC might be able to push some things down to the subcontractor. But, you know, if it goes into litigation, they're going to go to the main contract most of the time. So this one was... This one was a big one. This was one of the first ones that I actually experienced that really started, you know, getting my attention. And again, another plumbing subcontractor failed to turn off the water on the fifth floor bathroom. They cut into a water line to install a valve. The water, of course, flowed down. You know, it takes the path of least resistance, which is usually elevator shafts and, you know, electrical systems, bus docks, conduit, all that stuff. And all the major electrical components had to be replaced. Again, almost getting ready to turn this over. And electrical and elevator stuff is very expensive. It resulted in a $1.2 million claim. And this was a very, very reputable GC, by the way. And, you know, I'll get into some of that as well. But, I mean, you see here, we don't have a lot of finishes, but still a lot of water. And it's very expensive when it gets into your electrical system. And there's some electrical panels. And there's some electrical panels damaged. This is a renovation, which was another, also an early one that I dealt with. So they were actually tying, so they were adding an addition onto a hotel. And they tied into an old pipe gasket. They used the old pipe gasket and tied into a new pipe. And when they did that, that old pipe gasket failed. And this is another interesting thing. Because we've got this damage to existing building language that's rolling out there a lot on a lot of these policies. And this is where something like that would definitely be applied. So water ran down the stairwells, drywall insulation, the yada yada, flooring, hardwood, everything, basically running down multiple floors. And a $760,000 loss. Now, as many of you know, these policies aren't $760,000. So you're way upside down on a standalone builder's risk at this point on something like this. And if you have multiple of these, and this is the actual gasket where they tied in. And you can see it's quite old. So one of the things that they did is they changed their policy and they inspect all of these. If they suspect any issues whatsoever, they replace it. They go back to the owner, they say, we're not confident in this tie-in, so we're going to replace it with a new one. And then just more water, basically. Also, another leak from a tie-in. So this is my doozy. This is the one that left a big scar on me. This is a three-inch pipe fitting installed in the ceiling on the 15th floor of an 18-story new construction project. The fitting failed. We don't know why it failed. Water flowed around some of the areas on the lower floors, but they caught it really quickly, and the damage was minimal. GC hires the plumbing sub, comes in and replaces the fitting, and the water service is restored. And we have a $0 claim. Whoopee. Great story. There we go. However, at some point during the night, the new fitting failed, and water ran down to the lower floors, causing extensive amounts of water in many, many areas. We don't even know how long the water was running before it was discovered, but it was a significant amount. One week before the building was being restored, the building was being restored. One week before the building was being occupied and turned over to the owner, that fitting failed and wasn't noticed. It was noticed on the fifth floor. It damaged elevators, cabinetry, drywall, ceiling fixtures, flooring, fire alarm system, electrical, and, of course, we got into soft costs because there was extensive loss mitigation, debris removal expenses, and got into huge amounts of soft costs due to the delay because we were right at the end of the project. So we sent out an investigator, and we did a deep investigation and determined that the three-inch water pipe that failed, there was nothing wrong with it. There was poor workmanship. It had not been sealed properly. And probably not glued properly. And no quality control program in place. So nobody discovered it. Nobody was going around checking to make sure that the fitting was glued properly. And so many of these losses are due to improperly glued fittings, et cetera. Well, this is definitely the largest water damage claim I've ever had, this $3.9 million, and I hope I never have another one that large. It's a very, very stressful time. It just goes to show you that, you know, we had zero claim because we caught it early, and then after it was replaced and then not caught for a long period of time, that much damage took place. So the GC's in control of all these subs. Obviously, the GC's not typically have a lot of self-performing on the job. They don't typically cause the loss, but they have the ultimate responsibility. So from what we're seeing is that subcontractors, plumbing, mechanical, sprinkler, demo contractors are the prime culprits. I will add pool contractors to that list now. We've got a real labor shortage, especially in that 2018-2019 time frame when there was tons of work and subs were, you know, just pulling anybody off the street that they could to do some of this work. At the same time, we've got a lot of older experienced workers retiring, and they're taking all that good knowledge with them and not sharing it, not passing it down. We have the same thing with all industries, right? I mean, there's a brain drain. There really is. We've got new materials being used, PEX versus copper, which has its advantages and disadvantages. And then we're talking about, you know, renovations in particular. There's a lot of those, especially, you know, out here on the East Coast, and we're tying into old systems. Eileen, do you have a video available? Because one thing... I do. Yeah, you can play the video now. Sure. Yes, please. Okay. Well, that gives you a good idea of that's not Niagara Falls, but it looks like it. When I say rarely does the- I will get rid of it. I will get rid of it. Yes, I will. There we go. I have a question here. I don't know if this question, if it's old, Jackie asked, wouldn't it be covered under wrap-up? I'm sure that was a couple of slides ago. I don't know if that makes sense, just asked in that context. Jackie, if you want to clarify. Well, you're assuming there's a wrap-up in place, number one. Number two, wrap-ups don't typically cover builder's risk. They're usually placed outside of the wrap-up. If you're talking about an owner-controlled insurance policy. Those don't cover the builder's risk. Excellent. Jackie, if you have any follow-up to that, just raise your hand and I can open your mic for phone. That is something I want to repeat that Lillian said. If you have a question, just raise your hand and we can open your microphone. Jackie did raise her hand. Jackie, I'm going to open your microphone. Hold on half a second. Now you should be able to- there you go. Can you hear me? Hi, Jackie. Hi there. I just had a question. I'm just wondering if there's faulty workmanship, would that not fall under the wrap-up? Like I know it's separate from the builder's risk, but I'm assuming most projects would have both policies in place. So a wrap-up is, you know, it's going to cover the casualty lines only and would not include the builder's risk. There'll be a separate builder's risk policy and there's going to be that other insurance clause in the GL portion of the wrap-up that is going to say if there's a builder's risk in place, you're going back to the builder's risk. And a builder's risk, if you have, you know, what somebody mentioned is leg two, which is basically the faulty workmanship, the resultant damage from faulty workmanship, then it's going to fall back on the builder's risk. And we're going to play for the part that caused the faulty workmanship, but all the resultant damage is going to be caused. And as we know, it's not the part that's expensive, it's the follow-up and everything with that. So does that answer your question? Yeah, it does. I'm just curious now. I have to go do some research on the wrap-up side. Okay, thank you. Yeah, typically, there may be instances where a wrap-up, I have not seen any instances where a wrap-up covers a builder's risk policy, and they're usually placed outside of the wrap-up. But they're, you know, insurance is ever-evolving, and I don't do wrap-ups, so I don't know if that's something that's been newly added or not. But I would tell you that they're typically placed outside of a wrap-up. So that video you just saw, so when I say rarely, is it the GC who directly causes the loss? In that particular case, the GC directly caused the loss. And this was a big lesson for the GC. This was a, I mean, a really best-in-class GC. They didn't have losses. They never had a loss until they had a loss. That loss in particular was substantial. It was about a four- or five-story frame in a condo or apartment, something like, anyway, residential, you know, in the hip part of town. And what happened was they were working on the roofing contractor, that, you know, recurring theme here again, which needs to be added to the subcontractor list now after two roofing contractors involved. But this actually was the roofing contractor doing the work under the direction of the GC. It was a Friday. They tarped the, in just a second, I'll, I've got the notes here on this exact thing. They tarped the roof on this building because they were, they knew it was going to rain, and they wanted to wait for the exterior to dry out before closing the building as they knew it was going to rain. Downspouts were going to be installed once the walls were dried in. So this building was not dried in. As you could tell, there was not a lot of drywall, at least not on that particular floor. But all the electrical and everything was installed. There was no windows installed. So the building wasn't, you know, it wasn't enclosed. So while they tarped the roof on the tarp, they covered the drain holes or the drain scuppers to keep the rain and dew from dripping outside and down the walls. And the scuppers were supposed to be unblocked over the weekend, and they missed that step. And it rained like three or four inches that weekend. It rained all weekend long, which that was the, I think it was 2018, which we had an, you know, a massive amount of rain that year. It was the, if it wasn't water damage or material water damage, it was flooding that was causing losses in a lot of these places. So it was a significant rain year. Monday, all the crews arrived, and there's water. Basically, that tarp is over the roof, and it's acting like a swimming pool full of water. And they were afraid the roof was going to collapse from the pressure of the water. Well, keep in mind, the windows, they were not installed yet. And so the GC instructed the roofer to cut the tarp where the scupper drains were and release that pressure off the roof so the roof didn't collapse, which would have been, you know, even worse than what it was. And it was still really bad if the roof had collapsed. When they released that water, there were no drains coming off the scuppers. The scuppers just basically were a hole in the roof, and there were no drains going down the side of the roof. There was scaffolding on the side of the building. The water from the roof hit the scaffolding, deflected off the scaffolding, and poured into the building, as you saw in the video, resulting in approximately a million dollars on a building that wasn't even fit out. And the reason is we had to rip out every bit of electrical in that entire building and reinstall it. And the reason we had to rip out all the electrical in that building is because electrical manufacturers won't warranty their electrical if it gets wet. And so it all had to be ripped out. And that was a big lesson for the contractor because they had not dealt with losses before. And with the labor shortage, they had drywall contractors and mechanical contractors that had their employees scattered over to other jobs. They had to bring all of these other people from other jobs to that job to catch up to get it back on track. So they were paying overtime and bringing in extra crews. And they struggled with managing that with those. Now, they did a great job at the end of the day of holding all of those subs accountable for every penny. But still, I mean, they're paying overtime for these guys and they're paying time for them to be pulled off by the job. So anyway, that's... Sorry, that was my shout. I didn't realize I wasn't muted. And Dustin, just before we go on break, I think, Luis, you may have had a question. And if anybody has any questions, we have a lot that were texted in. I'm not sure which ones were answered and which wasn't. Luis Cruz, if you have a question, just raise your hand again. I'll open your mic. If anybody does have a question, maybe we could take a question or two before we go to break. So look forward to any raised hands. And we can open your mic if that would work for you, Dustin. Sure. Go for it. All right. Let me see who... Anyway, there's a delay for me to move the presentation. Yeah, that's okay. So here we go. So, Luis... I have my questions back now, too, Eileen. Oh, okay. Excellent. And Luis, I think your mic might be open. See if you can open your mic and you can ask your question. If you want to ask your question, Luis, I think I opened your mic. You just have to open it, too. Okay, perhaps not... So it says he's self-muted. Luis Cruz? Yeah, he's self-muted. All right, let me try Lori. I'll try Lori. Lori, you have a question. You have your hand up. Yes, I just wanted to see, because I had a hard time getting into this original. I was going in, I guess, through... Okay, I have a question. I'm sorry. I'm sorry. Your question is? I just wasn't sure how to go about getting credit if you had me listed at the beginning as having been a party to this because I was on the call. I am fine with it, Lori. I will definitely issue the credit. We also recorded it, so anything you missed, and I'm sorry if anybody had trouble. It is our first time launching with GoToWebinar, and I know if there was any challenge at all, it's being recorded, and we're happy to send it to you and happy to provide the credit, so I'm sorry for any trouble you had. Thank you so much. Oh, you're welcome. Enjoy the rest of it. All right, so we'll keep moving on unless there's any other questions. There's one more from Matthew Dunn. Should I open Matthew? Give me half a second. Matthew, you have a question? I do. Good morning. Thank you. Dustin, I was curious, the percentage of soft costs that are typically paid out on these water loss claims, is it pretty substantial or whether it's towards the end of the project, I imagine, the delay? When it's towards the end of the project, it can be substantial, so here's the trade-off, and here's something that I would say about that. So as an underwriter who's experienced a lot of these claims, I work very closely with my claims people, fortunately have been able to hear about these claims early on, and I get involved right away, and one of the things, I don't get in the mix of what's going on with the claims adjustment process, but what I do is I work with them because they don't know every nuance of the coverage and they don't know everything about the contractor and all of that, so I try to fill in some of the gaps there for them. But one of the things that I try to, you've got to balance is, okay, so that particular project that I just mentioned with the GC, they actually, they spent a ton of money on extra expense trying to get that project back on task. So while that claim was a million dollars, we didn't have any soft cost payout on that claim, and it was a miracle that we didn't. I mean, a magic miracle, and I give that credit to the GC who worked tirelessly to try to get that project back on task. Now, we paid more in overtime costs because of that, so my goal is to try to stay out of the soft cost payment because they're so complicated to get involved with, but when they do, they're long and protracted and nasty. I mean, one of the first ones that I showed up there, which was the multi-story building, the gun, the electrical, and everything was $1.2 million. A lot of that was soft costs because it was at the end of the project. And the problem, the risk you run into is these losses occur at the end, so it is very, very likely that you can get involved with soft costs. I do everything in my power to help and assist my contractors in avoiding getting into the soft cost, but it's not always possible. So while my percentage for soft costs has actually been pretty good because I work with them to try to get back on track, I think that, and that would be a good question for the group who've experienced some of these losses is what kind of soft cost concerns you have because at one end, you've got this extra expense amount figure out there that they're drawing from, and as we've seen over the years, those numbers have creeped up dramatically from small sublimates to huge sublimates. So I mean, it's kind of you're borrowing from one pot versus the other, but when you're talking about getting forensic accountants involved and trying to keep track of when would the project have finished and the extended period of loss and all of that stuff, I mean, as much as I can stay out of that, that's better for me. So we've done a good job of keeping that at bay for the most part, but when they do, that's the $3.9 million loss and the $1.2 million losses, et cetera. So I'd say 30% maybe. That was a long, convoluted way to get to that answer, but... All right. There. Okay. So I mentioned earlier about PEX. Oops. Of course, now it's going to move. If I can go back up there. PEX versus soldering. Let's give it away. Okay. So crimping versus soldering connections. So... Oh, I don't know. You know, PEX has been around for a long time, but it's really been used in the apartments and such, dormitories and the like for... I don't know. Maybe... I've seen it uptick in it in the last 10 years or so. I'm sure it was used before then. But what really the point of this particular slide is, so while you've got hot work over here, you're sweating pipe, and if you're in a frame building, you're sweating pipe and you don't want to burn it to the ground, then crimping is good. However, crimping requires a special tool. It requires special training and a really robust QAQC program to prevent water damage losses. And I think we've seen an uptick in water damage losses because of the crimping. However, it may be reducing fire losses as a result. So just something to consider, something to think about. Not just anybody can go out and crimp a pipe. That's something that requires some specialized training because of how much pressure to put on it and how to know if it's properly crimped and everything. So just something to think about. And then you've got in this new day and age... Come on, move forward. You've got these unusual exposures or new exposures, things that add aesthetically to these projects. Here's a rooftop water feature with a fire pit in the middle. At least the fire is not going to go very far, hopefully. But you've got gas lines running in there. But now you've got water on top of the roof, so you've got potential for leaks and damage. And I will say, recently, one of my larger losses... I think it just settled, as a matter of fact, for like a year later, which is weird. So property, you consider these losses to be... They're adjusted pretty quickly, right? They don't stay open that long. But these water damage claims stay open because there's a lot of people involved in the process. And you're collecting a lot of information from the GCs, which is often difficult to get. But one of the recent losses I have, which is why I mentioned pool contractors earlier, is another one of these top level... In the penthouse level, there's a swimming pool. And the swimming pool contractor hooks all the swimming pool up and everything and doesn't connect the drain pipe and fills the swimming pool full. It runs down 18 floors. And all of a sudden, we have a huge water damage claim. Clearly, negligence on the swimming pool contractors, which is a common theme here, too, is negligence. And it's something that I explored early on when these losses were occurred. I started asking my GCs, how are you dealing with these negligence claims? And honestly, there are ways they can do that. And I'll talk about that to some degree. Now, it's not an end-all be-all, but there is something. But when you talk about these claims... Yeah. I was going to say two things. One, we have a comment from Gina. And also, Wendy, would you like to have a break? Oh. How about now? It's 11 a.m. Let's hear Gina's comment first. Yes. Yep. Sorry. So Gina just said, also another unusual exposure is large gardens that need water lines for the plants. Yeah. Very, very good point. Very good point. And we've got all these green costs and everything in these policies these days as well. Rooftop vegetation with watering. Yeah. That's a very good one. Okay. Let's take a break. How long are we taking, Lillian? Ten minutes. We'll be back in ten minutes, and we'll talk about the cost of the claims, and we'll move forward pretty quickly from here. It'll be 1110 Eastern Time. Can you hear me? Okay. Hey, Lillian, I hear you. I don't hear you, Jessica, yeah. So you should open your audio the same way you did last time. Okay, you must have muted yourself when you went on break. Let me take a look if I go to... See what your microphone looks like here. So I'm gonna click that. It says audio pin. Phone, yeah, click to send their audio pin. Click to send their, so I'm gonna click this. Okay. I guess putting yourself on mute did something where you have to re-sign in or something. You should have an audio pin that you will put in, Dustin, since you're on your phone. Is it possibly emailed again? So the audio pin was just sent to you. I think he sees it. Oh, okay, I think I did it again. The amazing Dustin Jones. Look at you, Dustin. I think I did it again. I think I sent a second one that may have superseded the first one. It's all right, we'll get there. Thank you. Stan, do you say test, test? No, not yet. I'm afraid to hit. It shows orange, so it shows it's open, right, Lillian? When we look at his. It's so quick. How about now? OK, yeah, there you go. You guys, I'm so sorry. It's OK. That is what we need to send you. I don't know sign language. So I don't know how to do any other way to communicate. My apologies. The old one had a type in box where you can type it in. Yeah, but this one does not. I was looking in the chat, too. Yeah, I was trying to find a chat box. I don't see one. So, you know, before we get started. So Keith Colton also asked the question, what is more prevalent? Water damage claim roofing or domestic water damage claims? Say it again. I'm sorry, I didn't hear the first part of that. What's more prevalent? Water damage claim roofing or domestic water damage claims? Water damage. The plane. I'm sorry. What was the roofing roofing? Yeah. Roofing or domestic. And Keith, let's see, maybe he can. Maybe elaborate a little bit more on the roofing. You mean like I'm guessing like rain events from leaking from an improper installation of a roof or water damage from interior like domestic water lines, fire sprinkler lines, those kinds of things, is that. So I'm opening up his mind, Keith, if you would like to ask your wife. Keith Colton, so Dustin, I was just trying to get a feel for what you're seeing more of. You know, are you seeing more of the I'm seeing more of the domestic water damage type of claim activity from various things, faulty workmanship, et cetera, over the exterior water, you know, from maybe like a roofing water damage. I just want to kind of see from what what side of things that you're seeing. Are you seeing more of which type? Plumbers, plumbers and more plumbers. Yeah, I'm seeing big problems internally. Very poor QA, QC controls. Interestingly enough, there is a. There is a product that one of my GCs is using now because they have had so many problems with with plumbers and they require their plumbers to use a UV glue and this UV glue. So so a lot of the a lot of the plumbing losses are due to improperly glued PVC connections. So they don't get glue or more more commonly, they forget to glue the connection altogether. And so if you've ever seen a PVC glue, most of it's purple. So quite often you can tell it comes out the side. You know, if you've got white PVC, you can see the purple. And you know that the you know, at least it's at least it's had solvent on it. And potentially glue as well. Not all glue is purple, but the solvent typically is. So at least, you know, it's been cleaned. But this UV glue is you hit it with a black light. And so for a really nice QQC program, you can walk around and you can hit a lot of connections in a very short amount of time with this UV glue. Now, outside of that anecdotal evidence that they're using it, they tell me they're using it. I don't know exactly what product they're using and have not been able to get that information. But a UV glue with a with a black light being used as part of the QAQC program is a step in the right direction, if you ask me. But yes, these roof losses are not not that frequent compared to the plumbing and mechanical losses. They've been primarily plumbers. I mean, really, it's they're the ones connecting all the water lines and all the toilets and all the tubs and all the sinks and all of that. So those are the most likely connections to to break. And now, ironically, I've seen a few sprinkler sprinkler losses, but not many. The sprinkler contractors are pretty good with their quality. Where I've seen some of the sprinkler losses has been maybe a demo contractor coming in and knocking the head off of the sprinkler. And that's where it's important for the contractor to have a good mitigation. So, you know, and I'll talk about that briefly in a moment about, you know, what constitutes what should we be doing. So anyway, hopefully that answers your question. But that's that's definitely what I've seen over the years. And and I've seen a lot of pressure, for sure. So, Dustin, are you are you requiring a water damage prevention plan by all your GCs? And then if so, when are you when and if are you also requiring technology sensors and other such devices to notify, you know, pressure changes and water leaks? Hold that thought, and I will answer that question. I have a section on both of those that will that I will address your questions at that, if you can just hang on. If you have any other questions, though, feel free. But I do have a couple of sections that are that actually outline both of those things. So when I get there, I'll cover that as part of that, if that's OK. Thank you. Appreciate it. Sure. So I don't think I need to be. I think everybody's had, you know, 20 minutes to look at this slide now. So, you know, electrical, electrical, electrical is very, very, very expensive. And then drywall and flooring and such, you know, we're seeing an uptick in like the dormitories and the residential things. The claims costs are going up also because the materials used are more expensive. And then cleanup costs, I want to mention, I want to specifically mention cleanup costs. This is this was a big point of contention for me on one of on one of my very first. First claims, we identified this as a as a potential problem. This is where when we get into the water prevention and mitigation program, that it's important to have these guys on hand because so. I'll try not to mention any particular. Cleanup company, but. We had a claim, in fact, I mentioned it earlier, the one where the vandals came in and cut the cut the water lines out, that were that were all, you know, they were all turned on, all the water was turned on, you know, here's some of the new materials and such. And so this happens to be from that. So my my GC, another really good GC that just doesn't have losses. Now, this happens to be an act of vandalism. They call out the local cleanup crew and they come in and as you can see, maybe you can see in this picture down here to the right, you can see that they've cut out 18 inches of drywall all around this entire place. And this this is a school, this is not a multistory, you know, this is a two two and a half story building. So we're not talking a lot of damages, but what happened was rather than having their subs do it or bringing the crew in to make these cuts and such and to clean up, they hired this this company to come in, this restoration service to come in and do this. And they charge a ton of money to do this. And and then they hauled everything out in those trash bags, you see, left it out there for the the trash haulers. And they did, you know, they brought the drying fans in and all of that as well. But and these these these numbers, 45 versus 30, those aren't actual numbers. Those are those are just kind of just to kind of show the contrast. But, you know, let's say it costs you $45 an hour to have the restoration service come in and do it. But you can pay your sub, you know, who does this all day, your drywall guy or somebody else to bring in another guy or two to come in and do this for $30 an hour or less. You know, who knows? We're cutting out drywall and taking out the trash. Now, you can, of course, you know, mold is a concern. And you can bring in the restoration contractor for drying fans and all of that. But the point is, for this is they didn't have a plan for this. They just opened up the phone book and called the first one they saw. And this goes back to that prevention and mitigation program in that you should have these guys on speed dial. You should probably have a contract with them or at least an idea of what they're going to charge and then have a scope of work of what you want them to do. Because they came in and did all of this work. And this claim, which should have been $150,000 was $250,000, you know. And so if you look at the top, if you look at the top there, you'll see such and such abatement. They came in and they put a blank receipt out there with no itemization at all. Now, you see itemization at the bottom because our claims people went back. And even though that's not a lot of itemization, our claims people went back and made them justify every single dollar. Because the first invoice that we received was blank and just said total cost $29,200 or whatever it was. This may not be the actual invoice for that particular job. But this is what you would want to see with the itemized piece versus one that's just, they don't give you any information and they just say, okay, here's what it costs for our services. Our claims people know that they do this and they go back and they make them justify it. But it's a lot of time and effort. And if you have a contract in place with these folks ahead of time and you require them to itemize and you let them know you're going to be auditing this as part of the expenses and justifying their cost, then it saves everybody time and money. And I can assure you it costs more to have it done than it should have. So what can we do as underwriters? Well, first thing you have to do is whether you're writing the project for the owner or the GC, you need to understand who the GC is. Do you know anything about their reputation? Now, those of us that have been in the industry a long time and in your particular geographic area, you probably know who the good GCs are and who the ones that are not so good. We have some in this area that are notorious for water damage claims and have been notorious for years and years and years and years even before this uptick. And some of us just stay away from those guys. So pre-qualify these folks. And maybe take a look at their contracts and see what they're doing. And if you can't get that information from your broker, get loss control, risk engineering, whatever you have on staff to try to get a phone call with the GC. Often, even though you're writing for the owner, you can get the owner to allow you to talk to the GC. Impress upon the owners that you want your GC to have a good quality control program because they don't want it to be delayed, especially these residential projects where a lot of these claims are occurring that are water damage related. They've got rental income at stake. And that $3.9 million project that I mentioned earlier where we had the loss for $3.9 million due to a quality control issue from the plumber. Now, what I didn't mention was that plumber was in financial peril and the GC bailed them out. So it was already ugly. And the owner who exclusively used this GC for all their projects fired that GC and never used them again. They lost out on a ton of money. They were very, very upset. Now, we still ended up paying all that money back. But that GC has lost their reputation with that owner. And if you can impress upon the GC, they know. I mean, the owner is the lifeblood of any project. So if you want to get recurring business from an owner, you're going to want to do a good job. So owners don't like delays. So if you're dealing with an owner project, an owner-controlled project where you're writing for the owner, you can push them. Look, we're seeing these kinds of issues out here. And you need to make sure your GC has a good comprehensive quality assurance and quality control mitigation program. And water damage is a big concern on whatever type of project it is that you're writing. And Gina said that there's also asbestos removal as well as part of the water damage removal. It can be if you've got asbestos in a renovation, certainly can be also problematic. When you're talking about hazardous materials having to be ripped out, that's a whole nother animal. You're talking about renovations on old buildings. You've got an issue that can get very, very costly. So that is a good point. Well, what else can you do? Well, meet with the GC early in the project with your risk engineers. If you can get out there with them, great, because that's what I do. I go out there like a bulldog, and I'm asking them all questions. Because my risk engineers, they know a little bit about what the concerns are from a pure loss control perspective, but they don't know what my underwriting concerns are completely. So I can get in there and really dig deep with some people and get into conversations in depth about their processes and procedures and etc. and help the risk engineer out. And when you can't, at least you can send a risk engineer out with some specific questions and find out what they have in place. So when we started this, you know, 2018 again, I say is really when we started. At the end of 2017, 2018 is when I really started being impacted by this. You would go and you would talk to the GC and they wouldn't give you the time of day because they didn't care. Because they, I heard, I can't tell you how many times I met with the GC talking about water damage and we just don't have that kind of problem. We just don't have that problem. And so what are you doing about it? Nothing because we don't have that kind of problem. We got a mold prevention program, you know, and such. And quite often, it's not until they have a loss and they have to deal with the claims and they start figuring out that it costs them a lot of money and that insurance doesn't cover a hundred percent of the, you know, the costs that they have and it doesn't help their reputation and things like that, then you can get buy-in usually after that. But if you can bring some of this information, which is what I've done, is we did like a grand tour with all my GCs and we got out there and we did a presentation for them and we sat down with their PMs and their, you know, their project managers and their superintendents and we went through a presentation and I went down through these claims and I said, you know, this is what some of the best-in-class GCs are seeing right now. You've been lucky but your luck's gonna run out. And sure enough, I mean, you know, I think we've all seen that even the best of the best have had some of these issues. And again, it's back to the subcontractor quality most of the time. But if you can get their early buy-in and you can really get them to do something on the front end of a project, it's a lot easier than getting them, you know, to buy in, you know, halfway through. So obviously, it's primarily a severity problem, although I did have a GC that had a frequency of severity. That's a thing. But, you know, they're just not aware of the problem until they have a loss and they have to deal with the cost. And God forbid there's a soft cost claim involved because they really don't know what gathering information means until you have to get a forensic accountant involved and start collecting every bit of data. So, as we know, you know, we've got 200 and some people here today. It's an industry-wide problem. And, you know, when I started screaming from the mountaintop, it wasn't quite out there to the masses. And now I think it definitely is. I've learned a lot over the past couple years about, you know, I was pretty naive in the beginning that I thought I could just go out there and start preaching to these general contractors and, you know, they would get religion and get on board and everything would be mitigated and fine. Not the case. You know, this is something that is near and dear to me, but I want to share this with everybody and, you know, make it an even playing field. We all want these laws. We all are here to make money on these projects. The GC is here to make money. The insurance carrier is here to make money. The owner wants to make money. So there's nothing good can come out of one of these losses. So if you can stress that to them, you're going to have a better chance of getting some mitigation in place, some prevention. So as we know, the BR policy covers the owner, the GC, subs of all tiers. So what does this mean? Well, this means that, you know, it doesn't matter if it's negligence on the sub, you're still going to pay the claim. You know, we pay stupid all the time. It's just the way it is. Can you find out if there is going to be any technology employed and what is that, you know, what does that technology look like? Is it mitigation technology only? Is it prevention technology and mitigation? What is it? Are there a formal plan in place that outlines the responsibility, the mitigation once a loss occurs or once a water damage claim occurs? Do they have a list of vendors? Do they have spill kits on location? Honestly, you'd be surprised at how many people that don't have a spill kit. And these are simple, you know, barrels full of, you know, the spill kit, you know, everything from kitty litter to the absorbent booms and, you know, shut off valves for if you knock a sprinkler head off and those kinds of things. Where's the spill kit located? Does everybody know? You know, a little training goes a long ways. Do you have the shut off valves mapped and marked? Do people know how to do it? You know, can you expand programs that they already have existing in place? All these guys have mold prevention programs. They have some quality assurance program, although it may not extend to the water damage the way you'd like it to. They could expand their emergency response plans. And, you know, ideally, they would have either an addendum to one of these programs or a standalone interior water damage prevention program, which, you know, some of the more sophisticated contractors are implementing. And I've seen in certain areas, on some of the really big projects, that the owners are now pushing down on the contractors as a result of underwriters pushing large water damage deductibles, etc. But here's what I would say about that. So I have taken this out to a lot of general contractors. And I have made it part of the recommendations. I have sent loss control out to enforce it. I have had loss control help, you know, with these programs. But it is a long process to develop one of these programs. And I have, right now, three GCs that are working on programs that are not done yet. They sent us the first draft for us to look at and help them with. And, you know, the first draft looked like a mold prevention program. That it's great, you know, you want to control mold, but that's not our primary purpose with the builder's risk, because we have, you know, hopefully, small sublimits for that built into our programs. So it's a labor of love. And I have one that's been working on it for two years, trying to get it put together and, you know, trying to get their project managers involved and trying to figure out what kind of technology they're going to use. They've been investing in research on different kinds of technology systems. And there is a ton of those out there right now. So the answer to the question is, yes, I'm trying to push it on my general contractors to implement these programs. But pushing it on them and getting them to the execution phase is a different story. It is challenging to get them to actually implement these programs. And as we know, you know, training, getting out there, I do know that the training that we've provided has made a difference. One of the losses that we had, which is kind of comedic really, is we had a plumber who installed a water line on a refrigerator. The water line failed, and you could hear the water running. And there was a night watchman. And he would make his rounds every hour, and every hour, he would write in his notebook that he hears water running. He heard the water running, and he wrote it down every time he walked through. Never stopped to see where the water was coming from, but made documentation and notes that the water was running. That was a $250,000 claim right there that could have been a $0 claim if the watchman had known what to do and had done it. So one thing that I've learned is deductibles are definitely changing behavior. I think originally when I started this process, it was kind of, I was hoping that would be the last resort, and we could get buy-in with other methods. I think, quite honestly, behavior is driven when these guys have skin in the game. And that's really, really seems to be evident now. The GCs are often passing these deductibles down to their subs, which can be very punitive if you have $100,000 or a $250,000 water damage deductible, and you're passing it down to the subs when a result of their negligence. You know, it can be very, very, very hard for a sub to be able to absorb. But that is happening more and more frequently. How much time do I have, Eileen? Yes, we have about five minutes, Dustin, before we need to go to the next presenter. Okay. You know, question, question, questions. Find out what they're doing. What can they do? So one of the things that we've been trying to do in the technology section is, do we shut the water off? Can we find a way that when a leak occurs, can it automatically be shut off by some of this new technology? If you're in noncombustible construction, maybe it's fine for the GC to turn off the domestic water supply. Maybe the sprinklers, prior to them being signed off by the authority having jurisdiction, which is, you know, your fire marshals, et cetera. But sprinkler systems, that's a dangerous game to play, shutting off a sprinkler system just because of the life safety. So you have to be careful when doing that. The domestic water line, however, could potentially be shut off. But do you shut it off when there's freezing potential? And I mean, there's a whole host of other issues that it raises by automatically shutting water off. It's just not as simple as saying, yeah, just, you know, why can't we just shut the water off when something happens? You know, automatically shut it off. But there are implications for that. It can be done. And there are some technologies that do that. There's a ton of new technologies. I'm sure you guys have all seen a variety of them. Many of them are very expensive, and it is very hard to get buy in. I mean, obviously on the frame fires where we're talking about millions of dollars in losses on frame projects, getting them to implement some of this technology is much easier than on a water damage potential where you've got less dollars, no life safety involved, things like that. But these systems vary widely in whether or not they're mitigation versus prevention. So you've got the water damage system that detects the leak and notifies you about it, but doesn't shut the water off or do anything else beyond that. So potentially, you're claiming 100,000 instead of a million, which is big. It's a big deal. And then there are some new technologies that actually shut the water off. And I've explored many of these different technologies. Getting your contractor to buy the system is challenging. There are, especially a midsize contractor, probably some of the larger contractors are implementing some of these things on really high profile, large projects. But just the standard 10 story commercial building or something like that, or even some of these residential buildings can be challenging. I've been preaching this message for a long time, and I think I've had two or three that actually went out and bought the program. Now, I have been successful in creating some pilot programs just to get the ball rolling, but it can be challenging to get them... Now, contractors are not immune to technology. They are implementing new technology on their project sites for efficiency purposes. So some of those systems can also detect water, humidity, and other things. So there are some systems out there, and I've researched a lot of them. But again, the cost is significant, can be significant. The best thing to do is pre plan this, design it, and budget it in when you bid the project. That would be ideal. If you bid the system in, some of these systems can be turned over to the owner when you're done. You install them, and then the owner has this building system that can detect water leaks, because builders risk... Buildings under construction are not the only types of buildings that have losses. Static property has water damage issues as well. And then we talked about the shut off. Do you shut off sprinkler lines? Can you shut off sprinkler lines legally? Is it... What kind of liability do you have with doing something like that? And then, where do you place the sensors? So some of these are self installation. Some of them require a person to come out on site, but a lot of them require the GC themselves or the subs to install them. And there are some cheaper systems that you can just do water flow monitoring, and then put a few sensors out there that you can spend $5,000, $10,000, at least getting something in place to detect a loss in the first place. Alright, last poll I'd like to show you. Okay, Eileen, are you going to bring the poll out? I am. Okay, here we go. I think it's there. So is technology the answer to water damage losses? We've got to get to a few more seconds. We've got 50% voted and we've got over 200 here, so that's a lot of votes. And I will close it in one second because I know we're running short on time here. So we'll close and share the results. Hold on one second. There you go. Yeah, and that's what I would expect. I mean, technology is a great tool, but it's not the end-all be-all that we wish it would be. And honestly, again, getting people to buy into it is a challenge. So let's see if I can get this to move forward. Here's what we can do. We need pre-loss education, getting as many people involved in that conversation, education broker partners, so they can go out and explain this issue. You know, ironically, for a long time, I wasn't able to get to the contractors because the brokers would basically not allow it. And they were really pushing back on deductibles and things like that. And now they're becoming partners in this. They know it's an issue and they know it's detrimental to their insurance, so they're helping with this process a lot more. You know, they want what's best for their customer and losses makes it tougher for them to place the business later. So, you know, risk engineering, risk engineering, risk engineering, if you've got them, use them as best you can. Educate those folks on the problems. Get with claims and get, you know, I went to our claims files. I had to request a bunch of information to get it out of them. And that's where a lot of those pictures came from was claims files. And then, you know, we talked about the reputational impact. And then, you know, let's in the builders risk world, we're so often just a commodity to these people and the cheapest commodity wins. But try to, you know, try to get out there and share your knowledge and be a trusted advisor to these. And you'll endear yourself to the contractor who ultimately hates insurance people. So, you know, something to think about and get involved before it occurs. All right. Well, I'll just finish up by saying that I have learned a lot over the last three years. And I'm learning more and more every day. So, and any insight you guys have is certainly welcome to be shared. I think this is really an industry effort that we need to, because it has become an epidemic. And, you know, we've got to work together to help our contractors resolve the issue. So, anyway, thank you guys. Have a great day. Thank you so much, Dustin. We're going to take a brief five-minute break to our next presenter, instructor Robert Allman. So, we'll come back again at 11.51 Eastern time. Robert, you want to test your audio? I think I heard. Testing 1, 2, 3. Excellent. Sound great. OK, do I have slide control? So, Robert, you should have slide control. If you click on the actual slide, it should start to move your slides then. Like, first click it to engage your keyboard. OK. And then just use, there you go. And any time it seems to give you any trouble, just click it again, and then it should re-engage your mouse. Because every once in a while, that might need to get warmed up again. But yep, you've got your audio is good, your video is fantastic, and you have slide control. So in about one or two minutes, we said, yeah, about one more minute. OK. It should be great. Okay. Robert, whenever you're ready to get started. All right. Well, thank you, everyone, for tuning in today to learn a little bit about water damage and hot work. So on a cold winter's day here in the Northeast, what better thing to talk about than hot work? And the first thing we need to do is kind of define what that is, in case you don't know. Hopefully my slide advancing skills are good. If you click on the slide itself, and then you should be able to move it with the arrows on your keyboard. Yep, you got it. Legal department, of course, wanted me to insert this slide. We can circle back to that in case anybody wants to read it in its entirety. All right. Our basic objectives, as you can see. And let's start with the definitions. And, of course, we're going to quote our friends at NFPA, best place to go for this. Make a long story short, hot work is anything that involves heat that could ignite any materials in the work area. And we have some examples. Now, since this course is aimed at construction, this would also apply to the entire process of construction, including demolition. And let's not forget that OSHA plays a part in this as well. You may wonder why powder actuated tools are in there. It's because of the explosive charge and the ejection of the hot casing and the heat of friction that is involved when the anchor is blown into the concrete, so forth. Chipping is friction. And, of course, drilling is friction. Slide basically speaks for itself. Sadly, the photograph that's included with the slide isn't far from the truth at a lot of job sites and policyholders that I've been to. You'd be amazed what goes on out there. Good luck is a safety program for an awful lot of people. Some difference in the definitions of welding and brazing and soldering. But let's remember, even though soldering might be a slightly lower temperature, it still means it's hot enough to ignite something. And I don't mean to pick on our plumbers, but a lot of times they're involved in this. Here's some examples of what welding and brazing may look like. Very common during a construction process, almost from start to just about the end, depending on what kind of work is being done. I think Dustin and I found the same slide, but soldering, still quite common, even though there are other ways to accomplish this, especially on freshwater lines. But soldering is still out there, probably always will be out there. And then, of course, grinding. Come on, fly in. There we go. You'll see a lot of this at various stages during the construction process, usually done to level off where bolts may come through steelwork, but you'd be amazed how far into the process sometimes you might encounter grinding, especially if they need to fit something into an area where maybe exactly there wasn't the best communication between the architect and the shop drawings and so forth. Grinding can happen almost any time, even though it's more prevalent in the earlier stages of the build. Let's see, the cutting and torching, a little more common in demolition as we're taking the building apart. Very common in renovation, but once again, this may be necessary as part of the construction process to make things fit together properly. So, these are just some of the actions that you will find during a build or renovation where you can expect heat. During a finishing process, this has become popular, is heat distressing of wood to give it an interesting look, and this involves an open flame, and then you sand it and finish it. During renovation, paint removal, maybe use a heat gun, as you see in the photograph, heat gun, as you see in the photograph, or an open flame hand torch. Both will do the job. Both will burn your building down if you're not careful, if you don't do fire watch. I had a grandparent that was a house painter, and they always kept buckets of water available, especially in the attic, in case they saw smoke coming out of the eaves while they were burning the paint off the outside of the house. Hot roofing. The school that I attended a zillion years ago actually had a fire while they were doing hot roofing, because the roofer overheated a section, and the next thing, you know, we got half the day off, because they had to hose down part of the second floor. Part of the second floor. Not exactly boat building. We're not in boat yards today, but a lot of this goes on in the marine world, and you may see it in construction where they need to do a temporary enclosure of something on the job site, and if they have somebody that's not all that accustomed to shrink wrapping something, it's very easy for them to overheat whatever is supporting the plastic. Contrary to popular belief, the actual wrap itself is not all that combustible or flammable. You really have to work at it. It's a heat shrink plastic that's designed to be heated with an open flame, and if it was not made the way it is, we would have nothing but fires in our boat yards all over the place. Anyway, what usually catches fire is either some type of wood or padding on a temporary skeletal structure that they've put over whatever it is that's going to be wrapped to help support the top, and if the technician spends a little too much time in that area with the heat gun, what will happen is that material will start to smolder, and the shrink wrap just keeps it in. What shrink wrap does, if you overheat it, is it just perpetually shrinks and makes a cocoon around whatever is burning until whatever is burning kind of makes a little hole through it. What we want with pot work is a designated area. On a construction site, these are going to be varied all over the place. Here on this slide, what we're talking about is more like a fabrication shop where they will do nothing but hot work all the time. There are some other areas with permit required areas. You don't normally have hot work there, but you can do it if you do a pre-hot work size-up, and last but not least, of course, there are areas that you would never do hot work. This is Shangri-La. This would be an example of a place that is a fab shop, fabrication shop, and all they do is weld things here. Not too common on a construction site, but you can have an ad hoc designated area set up usually by maybe the steam fitters or possibly the plumbers where if they're going to be doing a lot of any one type of configuration, let's say every floor is going to get this type of system installed, they may actually make a little shop area on the build where all they're going to do is fabricate in part some of these pieces and get them up into place and then finish the job elsewhere. When you see something like this, it's usually your larger builds, your more organized builds, let's say like maybe somebody's putting in a building a hospital or doing an extensive renovation where you're going to have high-quality plumbing from biogas and things like that. As a loss control person, I walk into a construction site and I see this. I know I've pretty much got it. I'm gonna have an easy day on the job site doing my survey. Obviously, we would not be doing too much hot work inside a fuel oil storage tank. I guess it can be done, but it would be a lot of work. Slide is just there for shock value, but that gives you an idea that there are some places you just don't do it. And of course here, probably not, but if you do have to do it, you would need a pre-plan that's quite comprehensive and follow it to the T to make sure you do it safely because that appears to be some sort of, lack of a better term, sewer pit, sludge pit. Gases are a big problem, a big concern there. You may have methane or some other things that you get anywhere near that with an open flame, you've got problems, the type of which would make the news. We have our first quiz because we're going to be getting into some data and I just wanted you guys to think a little bit about data. Okay, here we go. So is this the correct, Paul? That is the department municipalities required to report fired data to the NFPA. I'll give you a few seconds to respond. Got the responses coming in. They are interesting. I'll give a few more seconds to respond. So far, we've got 52% of 240 responded. About to 60%. I will close and share. Here we go. 62%. Here we go. Ah, okay. Well, it may shock you to find out that the correct answer is actually no. Membership in the NFPA by your local fire department is optional, and the data reporting is also optional. Most do, but it's not everybody. And I wanted you to think about this when we start looking at the data on the following slides. To make a long story short, it's more than likely under-reported. Let's see. Do I have my slide control back? Here we go. So we're going to see how bad the problem is. And typical for NFPA, their most current data is just a few years old, but it gives you an idea about what's going on. So here, we're talking about homes, one and two family homes, and also smaller apartment buildings. These aren't high-rise structures. So during that timeframe, these are averages annually. So that's a lot of structure fires, and sadly, we have some deaths, lots of injuries, and certainly millions of dollars in property damage, which definitely affects our industry. Again, these are annual averages. The shame of it is this is all preventable. What's interesting is using their data, it would appear that a lot of this stuff happens when it's not under construction or renovation. It's just during normal daily operations of a dwelling or an apartment building. And where are these fires being started? Well, the first, you know, 16% and 13%, not really that much different if you look at data. Walls, other bathrooms, lavatories, sounds like plumbers to me. Sorry to our plumber friends, but a lot of water in those rooms or in those wall cavities. Don't mean to pick on plumbers, but the data is sort of steering me in that direction. Oh, well, this slide does kind of point the finger at our plumbing friends. It's really a tie for first place and second place, what was going on, soldering and welding, and then last, you know, cutting operations. So, something to think about if you underwrite in the world of single family home or small apartment building contractors, as was said in the first presentation, we have to start asking these folks a little bit more about their quality control program or their hot work prevention, you know, program, because the data is showing us that we have issues. Commercial world. Again, these are annual averages. A lot of fires. Sadly, deaths, more injuries, and the dollar value on an annual average goes up by almost 150%. Significant. Again, similar to the homes. More of this seems to happen during the normal use of the building as opposed to being under construction renovation or being demolished. That said, does not mean that we don't have the issue in buildings under construction. Now what kind of businesses had the most incident? Interesting that manufacturing would, because being based in the New York metro area, I don't see that much manufacturing anymore in this area, but trying to find some reasoning for that. In manufacturing, you probably have a lot more hot work on a normal daily basis as part of production, as opposed to repairing or doing some type of construction activity. The last two bullets on this slide are kind of interesting because using NFPAs data, places that store or have automotive related storage in NFPA parlance, meaning car parking or storage of vehicles, tend to have a problem with hot work. And of course, this doesn't help us too much, but where these fires start, if 25% of your data is other, okay, let's see. If so, hot work is important, that gets done wrong. So, we need to talk to our roofers and ask them some questions, because other is useless. Now, how that can happen, being involved with my own fire department and doing records and so forth, the fire incident reports that get sent up, depending on how you instruct the person that's completing the reports, if at the time of the fire they don't know an exact cause because the fire marshal hasn't been there, the default box is other. So, if the report is completed early and they don't know exactly what caused it, this is how you get other. Ultimately, if they wait and do an updated report and the fire marshal determines that the cause of loss was undetermined, this is how you wind up with 25% of the commercial fire data being other. Just kind of the way the data is built. ... Not a surprise, what caused the fire, welding or torch cutting, which is almost exactly the same thing, except in one case, it's the same tool almost, if you're taking something apart or you're welding something together. In case nobody's had the pleasure of doing this in the home, I just wanted to show you what soldering is all about. You either use a heat gun or, and this more commonly is an open flame, to heat up the pipe and then you use your solder to blow it into the joint. I guarantee you if you live in a frame house, look around next time a wall's open or if you're in the basement and you don't have a finished ceiling, look up, any place you have pipes with solder joints, you are probably going to see scorch marks on the wood. And this is how, especially today, with engineered lumber and truss frame and all this lightweight frame construction, this is how we start the fires. One way to prevent it is to use heat shields. Most plumbers know what they are. Do they all use them? Can't say. Some of them you wet down, others don't need that. But when I walk up on a job site and I see plumbers doing soldering and it's frame construction, I better see them using some sort of heat shielding material. If not, I'll talk to the foreman. Why is this good? As our first presenter said, there's a new way to fasten pipes together, a cold way. Depending on your location, they may call them push fittings. They're all a crimp fitting, whether it's copper on copper or the somewhat new to the Northeast area PEX, which is plastic piping. That is all assembled using a crimping tool. With a caveat, you have to make sure the crimping tool matches the pieces that you're crimping. Early on, there was only one supplier of these copper crimp fittings and tools and so forth. As time has gone on, it was a complete system. As time has gone on, naturally, there's competitors. Their people make universal fit and so forth. You'll find out if these compression fittings have worked on first test. Hopefully, they don't wait to charge the plumbing until everything's closed up. Who knows? My fear is from an insurance standpoint is what makes especially the copper crimp fittings work is an O-ring. We all know O-rings have a lifespan. I've seen crimp fittings as big as somewhere in the three to four inch range being allowed in the New York metro area. When that O-ring finally fails at some point in the future, that's going to be a big loss for whoever's insuring that building, but it does take the hot work exposure right out of the equation. This is all done cold. From a fire prevention standpoint, it's always good to ask, is there a cold way to do the job? Of course, doing the gluing like with PVC, that should be cold too. You should not be putting heat on PVC pipe. For your better contractors that have a formal safety program, there should be a decision tree involved when they're planning the job. Most contractors by nature are not paperwork oriented people, but your better ones, your larger ones will employ people on their staff that actually plan these jobs, so hopefully they have a process like this. Pardon the slide, it just speaks to a more elaborate decision-making process, and here's where we get into the world of fire watches. When do you have to do a fire watch? Cliff notes on that is if you're doing hot work, you have to have a fire watch, whether it's municipally required, meaning the authority having jurisdiction, there has to be hot work. Even if it's not a formal program, somebody has to watch out for embers and to make sure we did not inadvertently set something in this building on fire. Of course, contractors always say, well, when do I need this? When do I have to do this hot work permit thing from the fire department or the, you know, the authority having jurisdiction. It's going to be a little different in every area that you go. Basically, anybody doing hot work, if we're talking about construction, we do have some exceptions. Of course, homeowners, if you're working on your own house. The exception not to get too foggy here with plumbers and electricians and mechanical contractors. Common misconception is, well, I'm a plumber and I'm working on this building, so I don't need a hot work permit. Not exactly. You should have a, there should be a master hot work permit or plan for the job, but they're going to need a task specific one or wherever they're actually working in the building. So the hot work plan that they have for maybe doing some work down in a boiler room is going to be different from any soldering they're going to be doing up in the apartments. So, and ultimately we can always hit them with OSHA will require that they have a hot work permit, even if the local authority doesn't require one. When I had a staff that I used to train, I always drilled it into their heads. What would, what would you want them to do if there were no laws or codes? What would be the best practice? Oh, well, we'd want them to do this, this, and this. Right. That's what we want them to do. We want them to do it right. Think about this. It's not always construction. You, if you, if you live in an apartment building or anything other than a single family home, you go to an office, everybody that has a property other than a single family home really needs to have a formal permit process. And even you at your own home, if you're bringing somebody in that will be doing hot work, please do ask them what their plan is because fire doesn't care. It'll, it'll start anywhere. You give it a chance, but your property managers, they need to have a hot work permit plan or program that needs to be something in place that when they're going to bring a specialist in or even their own crew to do some sort of hot work, there has to be a program or a procedure. If we, if program is the wrong word and they don't like that, and it makes their eyes roll back in their head. And here are some of the basic elements. As you can see, it's not just construction. The complexity of this is going to change with the complexity of the account. You know, a little four-unit apartment building may not have this much, a really elaborate program. As you start telling people to write up things, they tend to freak out on you, but these are the basics. And going back to construction, it better be written and documented. It better be an assessment. And the assessment, by the way, shouldn't just be a one-time thing. During the construction process, of course, the nature of the site changes all the time. So, how the, how a site looked this week, two weeks from now, could look vastly different. There is no one-size-fits-all assessment. Hence, the ongoing review and updates. Very important. Who do you train? Well, of course, the supervisors. Come on. Let's go back. Supervisors need to be trained. You will hear the term a competent person. That should not be a foreign word to any contractor. And, of course, the person doing the work. Here's what the permit does. Notice I underscored exact location. This is where one-size-fits-all hot work permits fall down. I've seen plenty of those. They look great. People copy them off the internet. They're worthless unless they actually pinpoint where we're doing the hot work. They actually identify who the competent person is. And I mean to the point where they're saying Fred Smith is the competent person, not just the foreman. This stuff needs to be depicted. Fire protection equipment. Where is it? And special surfaces might mean, like if you're working near anything, it might be especially susceptible to igniting or being damaged by embers or slag or something. That needs to be addressed in there, too. It doesn't happen all the time, but it does come up. Things to consider. Just because it's okay to do hot work yesterday when it was nice and calm, today it might be windy. We could have a problem. Will it blow embers someplace past the safe work zone? Your competent person. Did they come in today? Did they not come back after lunch? Did they go home early? Well, just if Fred Smith is the only person that's the competent person that is going to be either doing or supervising hot work and there's nobody else there to take Fred's place, that work does not happen today. Obviously, fire protection equipment. Do you have it? Is it in working order? And is the staff trained on it? You should be. They're doing hot work. And oh, by the way, is the hot work equipment in good order? Thinking along the lines of if you're doing something with a torch and you have the hoses going to your torch carrying the gases, are the hoses in good shape? Is there an anti-flashback check valve? You know, either on the end of the hoses or in the device, handheld device itself. Is the equipment in good shape? And this stuff gets beat up. It's one of the things I look at when I'm at a site. Robert, we have a question from Jacob Gomez. So, after the building has been constructed, would there be any way to get information on if the plumbing was crimped or soldered? He said, I feel that this information would be important, particularly because the O-rings don't have the longevity of a correct solder connection. Yeah, solder? Okay. Solder, yeah, sorry. Solder. It's visual. You can tell it right away by just looking at it. Soldered connections have, well, it would take me too long to click back, but you will see between the two pieces of metal, you will see a little band of silver, whereas the crimp connections will have those little ribs on it where it was crimped. So, visual would let you know. I will tell you this, as far as my exposure to New York City building codes, they allow the crimp fittings for copper. They're not too warm to the PEX yet in anything other than four-family apartment buildings and smaller, but I'm sure that'll change as the contractors associations and so forth pester the city to allow them to use PEX more because it does save a lot of time, which means it saves a lot of money in routing plumbing lines through buildings. But, yeah, for all of our underwriter friends out there, that is a good question to have on any of your building forums. You know, can you see if the plumbing, if it's copper, we hope it is, especially on the drinking freshwater lines, is it soldered or crimped? Food for thought. Yeah, thank you very much for that. You're welcome. And for all the attendees, please continue to type in your questions or raise your hand. We are running short on time, but we'll try to get to as many questions as we can. Please don't try to read this hot work permit. This is the NFPA's version. We have it, I have it attached as a handout that you're welcome to take. It's a good one to fall back on. It'll give you the idea of what should be on a hot work permit. They all can be a little bit different. This is something to strive for, but will it fit every instance? Of course not. Here's another version. Hopefully my slide clicker is clicking. There we go. This is another way to do it. You can make them look nice. You can give them colors. A nice one about this slide is, if you noticed on the left hand, lower left hand corner, it does remind the person filling it out. This is only good for a day. We don't do blanket hot work permits. That lasts the entire job. My company, we have quite a few wineries as accounts. Sadly, not too many in the Northeast, but this particular winery came up with its own hot work permit. The reason they did that is because in these kind of facilities, there's a lot of piping. There's a lot of vessels and vats. Things have to be, you know, you have to keep in mind it's a food product, so things have to be sterile and so forth. So they made their own up. My point in showing this to you is, again, there's no one-size-fits-all hot work permit program. It has to be tailored for the location and not just the location, specifically where in the location this hot work is being done. And here, this one mentions the fire watch. And just looking at the slide, they spelled out that it must be conducted every 30 minutes for between one and four hours after the work is complete. That's a very good practice to do. In talking with a lot of contractors over the years, most of them try to conclude hot work either by lunch break or by about two hours before they're leaving the site. This gives them time to do their follow-up walkarounds, checking for things, and so forth. Worst situation you can have is to do hot work right up until the time everybody goes home and then nobody does fire watch. And that's usually when we have to show up with the red trucks around like 2 a.m. in the morning because stuff tends to just catch fire between 1 o'clock and 3 o'clock in the morning. Anyway, a reminder, your contractors or anybody, before they do hot work, they should be checking these things. If we have sprinklers, are they working? If we have fire extinguishers, can we find them? Are they ready to go? Is the hot work equipment in good condition? Well, just because it was good condition yesterday may not mean it's in good shape today. This 35-foot circle that you see, that's a standard. Does it apply everywhere? No. Obviously, if your room isn't that wide, your circle is going to be smaller, but this is a term your plumber or anybody that's going to be doing hot work should be familiar with. Next one is kind of common sense, but common sense ain't so common. Combustibles that can't be moved, let's cover it with a fire blanket. And that means an actual UL listed fire blanket, not just a blue tarp or somebody's old quilt that you got out of the attic. It's got to be a fire blanket. And let's think about what combustibles might be on the other side of this wall or roof assembly or whatever, because you may not have the fire on your side, you may have the fire on the other side. Some other things that they should be checking, the first one, you know, where it says conveyors, HVAC and so forth, what we're talking about here is trying to get the idea in that these are either floor holes, ways that drafts can occur, another means that will take an ember away from where the work is being done into some other place where it can cause a fire. Wind is always a factor, maybe not if you're working in the basement of the building and there's no wind, but we have to think about it. Shield the floor openings. And yes, if you're doing hot work overhead, you need to have something underneath unless you're doing a wet down. And if you are doing a wet down, will this need redoing? If you're doing that much work just because you put moisture on the floor at eight o'clock in the morning, it's probably not going to be there later in the day. Okay. Whoops. See, I think I jumped ahead. But anyway, let's see. I think we pretty much covered that. What should they be doing? During the hot work, they actually have to post the permit. This is a physical document that needs to be posted. The second bullet and third bullet is where we start to have problems. You need to have a firewatcher. It's a two-person job, maybe more depending on how big this work area is. Final bullet, firewatchers. It's their only job. This is why contractors hate hot work. This is very expensive. This is all they're doing, is just watching where the embers go and looking around to make sure nothing's catching fire. They're not running to get coffee. They're not doing any other gopher work. They're not getting tools. Their only job is firewatching. Okay. Slide control. Again, this is Disneyland, but this is what the NFPA would love to have you do, and OSHA copies it. What they're trying to show here is somebody working in an elevated area where the embers can fall to the area below. Maybe think like on a balcony or up on a scaffold near the ceiling or in the ceiling area, and the scaffold's only so wide, and then you've got a wider place below where all these embers can fall. Your competent person with your contracting accounts should understand what this is. When I speak with them and I'm getting a bovine stare as to what I'm talking about, I know I don't have a guy that's really that conversant with hot work. And of course, if this was multiple levels, that cone would go out as you went further down. So, think of somebody working at the upper level of a four-story atrium. You would need four firewatches. Would they like doing that because it's very expensive? No, but that's what's supposed to be done. Come on slide. William, can you advance to the next slide? I seem to be stuck on this one. I mean, it's a great slide, but you know. Okay. Let's see. I'm also stuck on this slide. Somebody put a quarter in the machine. Yeah. Eileen, are you able to move the slide? Let's see if I can go back. Figures what would happen on this slide. Oh, well. Okay. Let me see. Anyway, I'd like to correct the tech issue here. For our underwriters online, if you can get any type of information from your producers about what your account's hot work program or protocol or however they're phrasing it, what they've done in the past, what they plan to do for a job you're looking to underwrite, please see if you can get it. Because it's one of these cases where the more we as an industry push for this, it helps those that would enforce this also do their job. Giving an example, I have several friends that are fire marshals, and a common thing that they hear from the places that you can advance past that slide, if you could, is that, well, if you're going to enforce this code on me, you're being business unfriendly, and then they go complain to their local leaders. A lot of times, these fines get reversed and so forth, but as my fire marshal friends have always told me, you as the insurance loss control person, you have more of an impact than we do because you get to hit them in the pocketbook on their renewal, their overall insurance rates, and you basically help us do our jobs. If you're hearing things from accounts like, well, the fire marshal never asked for it, oh, I don't need to do it, no, that's not the case. They need to have a hot work permit system. No nonsense. Let's see if I can get past this slide. Yeah, let's see it. I had a control for a while. I hear a voice. This is Dustin. Hey, just real quick while you're trying to advance these slides. One of the things that we're big sticklers on the hot work permit program on builder's risk and other areas, but I'm surprised at how many times we're having to make a recommendation for people to implement a hot work permit system. What is your thoughts around that? How often do you see this day and age when this has been around for as long as I can remember contractors that are not implementing a hot work permit system? I'll put it this way. If we're going to talk about a formal hot work permit system, I would have to say we're about similar to where seatbelt wearing was in give or take 1972. They will do it, especially the midsize and smaller builds. They will do it if forced to. Otherwise, they're just relying on so-and-so's level of expertise and the way we always did it, which means there's nothing formal. Before COVID hit, I was seeing more of a push for this totally formal hot work program in almost every job size in Brooklyn and Queens where I do a lot of work on builder's risks. Sadly, that seems to have taken a backseat with the city because they're more interested now in checking for COVID protocols at construction sites, but there was some traction. It was actually nice to see. I would say for the jobs I was seeing in Brooklyn and Queens, it was close to, I'd say, 70%. It was refreshing. It was like, wow, they actually have a real working plan, a program that they just didn't boilerplate from someplace. Of course, you'd get a few guys that would look at you funny. Here's my plan, and then the loose leaf binder looks real nice, but then when you start leaping through it, you realize it's from another job. I always love the comment when you say, well, this is not this job. This is from the Dean Street job. It's like, well, it's a similar build, so it's the same program. No, but things had been trending better. Do we have a long way to go? You bet. I think from an underwriting perspective, a lot of us think that hot work permit programs are just something that every contractor is doing out there. The reality is that we find even some of the more sophisticated contractors, they may have a formalized program, but not implementing it or implementing it sporadically. That was my point there. You're right. Be suspicious. Trust, but verify. I will say this fairly comfortably. If you're on the larger builds, that may be all union contractors. Those tend to have the more formalized and better programs because there's just enough people back office to put these things together and then come to the site and you have a project manager that actually knows what's going on. They didn't just pass a test and now they're kind of a placeholder. The bigger builds, yes, it's the small to midsize builds that I tend to be a little more suspicious of just based on my history. Let me see. Can we move this slide yet? There's a whole lot more to this presentation than this adorable slide. Yes, Robert. We need to, Eileen's power is down. I'm trying to get the presentation up on my computer and then we'll connect to it. Only, I'm not able to get into my share drive, so I'm using your most recent version that you emailed yesterday. Okay. I'll pull that up in one second. All right. Okay. So again, for our, for our underwriters out there. If you can get this up front, be feel free to be a pain, they should have it for anybody in loss control that's out there. Push for this, it should actually be on the site. It doesn't mean that it. Okay, maybe if it's in the GC pickup truck. It's supposed to be on the site. And don't get fooled by a nice looking cover on a thing. On the binder for the program rifle through it and say it does this match this site, is it up to date. Look around. You know what's going on. Some of these guys don't understand that hot work is, well there's a large version of me. That hot work is more than just welding, you know, welding and brazing it includes all these other functions. Okay. Doing good so far Lillian. Keep it going. Yep, I'm just moving to the slide you were on. Right. We're probably up in the 50 range I would think. Okay, let's go to, let's go to 53 we've seen enough of 52. That got way more airtime that was the most boring slide I had. Let me give you control. Okay. Okay, so you should be able to click on the slide and move it now. All right. Okay. All right, just going back to that previous one. This is what should be going on. These are things that they should normally do. Put the tools away. Is it turned off. Stupid question. And is it cool right had a contractor, throw his settling torch into the job box. While it was still lit. And it set something else on fire in the box blew up and injured somebody. So, yeah, you do actually have to ask these questions. Okay now I'm, I'm stuck again. Slide 54 please. Some places use this, that's not a replacement for a hot work permit system, but it's a good tool, it's part of the system. Okay, next slide. Something we all need to remember is losses happen daily. Not all make the news, thankfully. And this is the last bullet there is all too often everybody thinks the subcontractor staff or subject matter experts, and they'll, and they just pay no more mind to it. They assume, you know what happens when you assume. Next slide. Yeah, let's go through. This is what basically what we're trying to avoid because all of these hot work losses are totally preventable. 100%. There's no reason for the injuries, the life loss, or everything else. Next slide. And sadly, this is how bad this can get. You had two firefighters killed in Boston a few years ago. Next slide. Hot work was being done and wind made it worse. Next slide. Very important to take into account hot work on combustible construction. A lot of these mixed-use buildings are going up where you have a fire-resistant pedestal and everything above it is sticks. You almost never have a small hot work incident at one of these things. You know, a lot of times it tends to wind up on the news like this. Next slide. Yeah, as it says there, they actually cited the contractor on that. All right. So, Rob, I've got a question for you real quick. So, given the fact that, well, the data from 2014, you know, we've had a slew of wood frame construction losses in the past few years, in particular huge fires that we've all seen on the news and maybe been part of, do you know what kind of percentage is caused by hot work versus, you know, vandalism and other things? Do you have any ideas about that? Yes, I didn't put it in there or you may not have time to see this slide, but an alarmingly high percentage is due to hot work. You'd be amazed. Hot work is a key cause. Let's go with that. Next slide. Okay. Kansas, similar problem. Jump down to the next picture slide, 66. There you go. Now, this was a little closer to home and a little more recent. The Avalon in Edgewater, New Jersey. Let's see. Click the slide below it. Okay. We'll stay there. The Avalon, New Jersey fire was not under construction. Sadly, that complex did burn while it was under construction. I don't know if it was hot work or not. I think it was, but the slide you saw before was after it was occupied. What happened there was their own maintenance staff was doing some work on some pipes and started a small fire. They dinked around with some fire extinguishers. They thought they had it. The first notice to the, had it meaning they thought they had it under control. The first notice to the fire department was when one of the sprinklers operated on an upper floor. By the time, when the fire department got there, the guys were like, no, we got it out. It's like, well, you have sprinkler flow on, let's say, the top floor. It's like, well, we were doing work down here in the laundry room on floor one. They went in there and used their thermal imaging cameras and found that even though the inside of the building was basically tenable still, they had fire in the floors, fire in the walls, fire in the ceiling. It was just eating up all that lightweight construction. So the point of that whole slide was anybody that's doing hot work anywhere, you need to have the permit system or whatever you want to call it. It has to be formal and you actually have to do it. The most recent hot work fire is this small little evidence, Edifice over in Paris, Notre Dame. What a horrible loss that was. Next slide. Can you go there? Hopefully that comes up. Now, you would expect that they would have an extensive pre-plan and a hot work permit system. They did. What were they doing? Part of the restoration process involved doing work on a lead clad wood roof. Mistake number one, fire alarm was local only. Big facility, you could see that. Uh-oh, the alarm did come in, but we sent security to the wrong section of the building. I don't know why. Apparently, it takes 300 steps to get up to the right attic. Well, by the time they got to the right attic, fire was well advanced. So, Paris Fire Department did their job. They got there within 10 minutes of being notified. Problem was, that wasn't until a half hour after the first fire alarm went off. And of course, reading through things, they may never know the exact cause due to the extensive damage, but the point of this whole slide here is, in this event, is don't get lulled into a sense of complacency that just because you have a big contractor with a really good history, working on a high dollar landmark type place, that they're going to be perfect. It's still a people problem. Next slide, please. Slide 69. Much smaller scale, my own fire department. Welcome to suburbia, single family house being worked on by a house flipper. It's cold out. He decided to go get coffee. The deli was three doors away. So, I'll leave the torch here from falling out the pipes. Neighbor's cold. Turns out, the deli was closed. So, he got in his truck and drove to the deli. Forgot that he left his torch burning. The house is still there. They've since repaired it. And a side benefit of this slide is, is you don't have to worry about it. You don't have to worry about it. You don't have to worry about it. Next slide. All right. Our last slide is a little bit different. People move into this house shortly. Next slide. All right. Our last quiz. Are we going to have people vote on it or should I just give the answer away? I'll open the poll now. Okay. Wrong. That's the results of the last poll. Sorry about that. I have too many windows open. I apologize. Yep. Okay, well, so we'll ask this quiz and we'll go over it orally because I'm trying to. Can we get that slide down? There we go. Yeah. Well, in the essence of time, I'll just, I'll just throw the answer out there and I'm sure most people would have guessed this. The correct answer is false. If you're doing hot work anywhere, in any kind of place at any kind of time, you do need to have a permit or a program, the complexity of which will vary with what type of place you're working on. If you're having your plumber over to sweat something, a pipe under your sink, that'll be vastly different than if you have a plumbing contractor installing miles of copper pipe inside a new high rise. Next slide. Okay, we have some resources. They should be able to get some of the handouts that I attached, correct? Yes. We sent actually all the handouts, and we can send them out again at the end of this. Okay, my last slide, if you're able to bring it up, pretty much says it all. Well, big fires start small and slide 78 probably should say something to the effect of, can you get 78? Oh, thank you. Okay, I guess it was slide 77. All big fires do start small. It's a people problem. We have to convince our contractor friends to take this seriously. We also have to get building managers and property owners to take this seriously. A written documented plan is appropriate in almost all cases. In the smaller cases like that house flipper that was essentially working on his own building, did he need one? No. But a written program? No. But he should have followed the steps. You would think it's common sense but it's not. People cut corners and so forth and just like we all had to be taught that you have to wear your seat belt every time the car moves 10 feet or 10 miles, we have to get our drill it into people's heads that do any kind of hot work that you have to think about it, clear the area, and then wait after the hot work is done to make sure nothing inadvertently is smoldering. So that's basically where we are. Thank you very much for everybody listening. I apologize for the technical issues. Fortunately at least nobody ran behind me while I was here so far. I was expecting my dog to do that but she's been good so far. Any questions out there? And you did fantastic Robert and thank you for bearing with us during this launch of GoToWebinar. No problem. We have the questions open and we're still looking for the winners for our engagement in today's. So if you have any questions you can either raise your hand and we'll open your mic or you can type your question in. So I'm looking to see if there are any. Okay so we also have some compliments. Katie Kazemi says great job and very informative. Let's see if I see any questions. we should let Lillian pick the winner. Let's see, yeah, okay. I had a feeling you were going to say that, Dustin. I can see all the names. So, do we have any final questions? Oh, let's see. Well, this is actually from a little earlier. This one is for Dustin from Pete, and he says, great job as usual. Speaking about renovations, I think we're heading towards an extended period, next five plus years, of many renovations as buildings are being repurposed. Any thoughts on renovations versus traditional DOCs from a frequency severity standpoint, you know, such as quality of subcontractors or any opinions would be appreciated. So, yeah, one of the things that I would say, you know, you brought up a good point that actually I'm diverting a little bit away from real quickly, but the residential space, especially in the wood frame apartments and dwelling or the residential, the quality of subcontractor is different than the commercial subcontractors often. And so, ironically, when we were doing a lot of wood frame projects, we were having a lot more problems with water damage on wood frame projects. And in fact, the one where the roof was about to collapse and everything, that was a wood frame project, but we were seeing a lot more quality control issues on that side. And as it relates to renovations, yes, that definitely was also where we were seeing a lot of the issues. As anytime you're tying into old systems, especially, you know, when you're updating things and, or if you're adding on to something and you don't, you know, you don't replace everything, but you're tying into an existing system, then there's, you know, there's a potential for that existing system to fail. And, you know, so, you know, the one claim that I had where the gasket failed because it was an existing piece tied into the building, that was a major issue. So, I mean, renovations, somebody mentioned it earlier about asbestos and a lot, there's just so many variances in the renovation space that can lead to a big problem. And, you know, a lot of the fit outs and things like that, where the, you know, the buildings are already fully enclosed and there's already the dry wall and the carpet and everything, and maybe they're ripping out some of it, but not all of it, then, yeah, I mean, I think the loss costs are going to be substantially more when you have those kinds of circumstances or can be, you know, especially when you're upgrading with higher cost materials. All right. Thank you for that. This question is from Jacob Gomez and it's for Robert Allman. It says, is there equipment used that can assist in directing or collecting the ladder? If so, do contractors try and substitute the equipment for less fire watchers? The short answer on that is that's where your fireproof blankets might work, but to short, the real short answer is not really, otherwise they'd use it because it would save them money. It's still a people process. There has to be fire, at least one fire watcher per level involved. Everything else that they put under there to collect anything, that's just being smart, but no, there is no go to the contractor supply store and order up a bunch of these and we're all good and we don't have to have fire watchers. So, that's part of the problem that we run into is fire watchers are expensive and this is why we have really poor compliance with that sort of thing, except on a really big high dollar jobs. Also, it's funny how much solder splatter you see whenever you're out on one of these projects too. They're not real careful with where that stuff goes. No, no, that's the laborer's job to clean that up. Yeah, exactly. I have our last question because I know we're just a little bit over the past one o'clock hour. Is it wise to get the demolition operations done prior to the start of the builder's risk? That's from Jackie Beard. I'll take part of that. Yeah, I would say as much as possible, you want to do the demo before you, especially when you're talking about tearing out old fire sprinkler systems and water lines and such. If you can do that while the water's turned off before you're... That would be great if you can do the full demo. Renovations, obviously, is where that comes into play the most and will be the biggest problem. I think one of the losses that I showed up there was a result of a demo contractor hitting a sprinkler head during the demolition process, but they kept the sprinkler systems on in case they had a fire and they hit it with either a forklift or a Bobcat loader or something like that. They hit the head and did not have one of those fancy tools that you can buy for $5 and block the sprinkler head off. Pre-planning is everything in construction, and these guys that do it every day should know how to plan that out properly. Should know. Should know. Depending on the municipality involved, you may not have that option to have all the demo done before you start the rebuild. What I run into here in the five boroughs is you need the insurance in place to get the permits. Many is a time I've had a new builder's risk to go out on, but the old building is still there. We're not covering it during the demo phase, but it's just one of those odd things about building in the five boroughs in New York that you need full insurance in place before they will even hand you a permit to take down the old building. You know, so it's nothing's ever black and white, unfortunately. New York is a unique animal that does not fit the mold of most of the rest of the country, though. That is for sure. Yep. All right. Well, thank you so much, Robert and Dustin, for your instruction today and for sharing your insights. It's been a pleasure to have both of you on this maiden voyage of GoToWebinar and also with Snowstorm and everything else being involved today. So, thanks for joining us in the virtual universe. We can't wait to have you back in person for a live class again. Thank you also to all of our attendees today. For most engaged today, it was really a tough choice because we did have a lot of engagement. Winner will be Jackie Beard. So Jackie Beard will receive an Amazon gift card. And- Thank you very much. Yeah, and so we actually have two that we can select and the other one will be Keith Colton. So Jackie Beard and Keith Colton, congratulations. You'll receive an Amazon gift card. And the final- Thank you both for participating. That's really helpful. The final code for today is 2021. Yeah, isn't that ironic, right? 2021. Hopefully a better year- As long as it's not 2020, we don't care. Yeah, exactly. And for those who were, the first code earlier was 0331. That was the first code and the final code is 2021. So please save your completed form. And then after you completed it, save it and then send it to my colleague, Allie Monreale. Again, I'd like to thank Eileen and Allie for all they did to coordinate today's class. As most of us are working from home due to COVID, it's perhaps more important than ever, having, being able to come together virtually. You'll receive a link to an electronic survey after today's class. Please take time to fill it out and provide your feedback to IMUA. And you'll, that's it for today. You'll hopefully go on armed with new information and insights from today's class. Enjoy the rest of your day in today's class. Bye. Thank you. Thanks Lillian. Thanks everybody. Have a great day.

Builder's Risk

Water Damage

Hot Work

Inland Marine Underwriters Association

Construction Projects

Plumbing Failures

Negligence

Builder's Risk Insurance

PEX Piping

Hot Work Safety Measures

Designated Work Areas

Safety Protocols

Hot Work Permit System

Fire Safety Measures

Risk Management