Project Insurance

Project + Insurance

• What is a project?– One time– Unique– Specific aim– Bears risks

• What Is Insurance?– Risk Mgmt.– A hedging tool– Against the risk of

contingent loss.

• Defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium

• It is a known small loss to prevent a large, possibly devastating loss.

Project Insurance

• Risk Analysis & Management are important activities of project planning.

• Insurance of Project Risks is a way to transfer the risks of a project to a third party(Insurers).

• Project Insurance products offered by insurers are generally customized offerings.

• The Project Insurance Market is a Buyer’s Market

Project Insurance is Customized

• Client-specific• Project-specific• Location-specific

Project Risk Categories• Material Damage Risks– The material damage is the loss of material due to

a risk happening. – E.g.: a fire takes place and some cables are burnt

and lost.• TPLs(Third Party Liabilties)– The third party liability (TPL) risk is any claim that

an outside party will make on you.– E.g.: property damage to a neighbour, Social &

Environmental Risks

Project Delay Risk Mitigation

• Part of Vendor Contracts• Project has several parties involved and each

is a link in the project.• Selecting vendors carefully and holding them

responsible for delays and TPLs if it is due to their fault, using legal contracts.

• Vendors may be asked to get insurance too.

The Cost of Insurance

• There is no cost consideration for safety.• Risk analysis and buying insurance provide

qualitative advantages like goodwill, productivity etc.

• Your business sustains even if a risk occurs. • If you do not mitigate risks, you sustain them.– Can your project afford it?– Will your project survive it?

• And, risks are serious during project execution.

Project Insurance Seller: HSBC

• HSBC Insurance Brokers' services• Risk analysis

We examine the risks to which the project is exposed including physical, contractual and delay risks and advise on insurance or contractual solutions.

• DocumentationWe analyse and provide insurance advice in respect of the project documentation including development agreements, construction contracts, lease agreements and loan documentation and where required, assist in writing appropriate insurance language.

Important for Project Insurance

Insurance is a legal process & requires

careful documentation

Project Insurance Seller: HSBC• Insurance programme

We prepare and place an insurance programme for the construction and operation of the project, providing protection to the project company and contractors including the following insurances and others, as appropriate.– Construction All Risks– Delay in Completion– Third Party Liability– Property All Risks– Business Interruption– Latent Defects– Marine Cargo– Environmental

Customized offerings

Project Insurance Seller: HSBC

• Negotiation with insurersWe negotiate competitively priced insurances with wide cover that works efficiently and places as little administrative burden on the insured parties as possible.

• Policy wordingWe write project-specific policy wordings that give the widest cover and comply with the requirements of the development contract, other project agreements and the loan agreement.

Buyers Market gets you competitive

prices

Clear terms of risk transfer through contracts &

agreements

Project Insurance Seller: HSBC

• Contractor dialogueWe confirm the contractor's compliance with the insurance requirements of the construction contract, establishing a dialogue with the contractor in relation to all insurance issues and facilitating efficient use of the insurance programme and the claims management procedure.

• Claims managementWe establish claims management procedures and advise on the appointment of a loss adjuster. We also provide claims information and statistics in any form that best meets the project company's requirements using our Internet Claims Management System.

Contractors are potential source of

project risks

Value Added Service Offering: POD

'You are now insured against fire, flood, theft liability, sickness, accident, death and any attempts on my part

to sell you any more insurance.'

Thanks