Efficient, Safer Construction Practices, Increased Competition in Financial Markets Behind Savings
Nearly $100 Million Saved in 2022, Nearly $300 Million in 2023
Metropolitan Transportation Authority (MTA) Construction & Development (C&D) today announced it had achieved nearly $400 million in insurance cost savings, reversing a trend of growing construction insurance costs. Lower insurance costs reflect safer and more efficient work environments where projects are completed in less time. The announcement comes as MTA C&D is procuring $385 million in coverage for over 200 projects.
The lower insurance costs reflect C&D’s enhanced safety measures to improve safety records on project delivery. Building on this improved record, it has aggressively marketed its safety record claims history and created incentivizes for brokers to reduce costs. C&D was also able to work with MTA Risk Management and the CFO’s Office to more strategically cover additional risk between anticipated losses and the maximum loss aggregate projections through more effective use of the MTA’s in-house insurance provider, First Mutual Transportation Assurance Company.
The savings are a part of an agency-wide focus on cost efficiency. This includes measures that have improved how C&D deliver projects on time and on or under budget, such as utilizing creative contract models that incentivize faster construction, eliminating unnecessary scope from projects, bundling related contracts across MTA services to achieve economies of scale, enabling aggressive project management by empowering project CEOs, and more.
“Insurance is an abstract concept, but these savings – on top of construction cost savings – will have a very real impact,” said MTA Chair and CEO Janno Lieber. “We can now re-invest the $400 million saved into more critical modernization projects that will help bring the transit system into the 21st century. Big win for MTA C&D, and big win for New York.”
MTA Construction & Development President Jamie Torres-Springer said: “These savings are the culmination of agency-wide efforts to make capital construction projects run faster, safer, and more efficiently. Insurance markets are recognizing these efforts.”
These efficiencies have resulted in hundreds of millions in savings – funding that can be applied directly to the MTA’s budget and allocated towards current and future capital projects across the region.
During 2021, total insurance costs were approximately 8% of construction cost. Market trends were pointing towards further increases in these costs, up to 10%. Instead, due to the leadership of MTA C&D, insurance costs for 2022 were reduced to 5.3 percent on $3.5 billion worth of construction – a savings of up to $95 million. In 2023, insurance costs were further reduced to 4.53 percent on $8.5 billion worth of construction, creating up to $295 million in savings.