The Client and Its Challenge
The client, a regional performing arts center, was planning to construct an $150 million performing venue. During an exploration of the available insurance coverage programs, it became apparent that the organization needed a better understanding of its natural hazards exposures, specifically earthquakes, which presented a serious risk during the construction period.

The Risk Consulting Solution
Using a recently released module of a natural hazard modeling tool from RMS, the Marsh consultants provided the client a natural hazards analysis and report that more closely matched its risk than previous modeling approaches. This recent module had been specifically developed for builders’ risk (construction) projects. One of the value-added changes to the modeling tool allowed for a "time slicing approach" to calculate the damage curve over the life of a construction project. This resulted in a damage curve that more closely matched the reality of risk for facilities and operations during the construction phase. In this case, the closer one got to project completion the greater the financial impact of an earthquake or other natural hazard.

Having worked with this client for several years, Marsh consultants had a thorough understanding of the client’s operations and risk profile and were able to utilize this knowledge to support the insurance placement in the marketplace.

Results
Based on the analysis and the report from the latest version of the natural hazards modeling tool, this client was able to better understand the natural hazards risks it was facing with the construction project. The client, along with the Marsh consultants, was then able to use this information to develop and implement a risk management strategy that included providing the insurance marketplace with invaluable information pertaining to the earthquake risk. Armed with this information, the company was able to obtain a premium reduction of $200,000 on its builders’ risk insurance.