-
8/6/2019 Types of Insurance underwriters & integrated policies
1/9
CLASSIFICATION OF
INSURANCE UNDERWRITERS
There are four main categories of insurance
underwriters in the international insurance
market as regards project finance
1. Multilateral insurance underwriters
2. Commercial issuance underwriters
3. Group captive insurance underwriters
4. Monoline insurance underwriters
-
8/6/2019 Types of Insurance underwriters & integrated policies
2/9
MULTILATERAL INSURANCE
UNDERWRITERS
Financial insurance companies controlled by multilateral
development banks
Most famous is Multi Insurance Guarantee Agency( MIGA )
A part of the World Bank group and operates on a
nonprofit basis to provide insurance for project finance
ventures
STRENGTHS WEAKNESSESProvide Coverage not
available in the market
Especially, as regards
countries with low income
levels
Takes a long time to
obtain approval
Up-Front fee requested
tend to be rather high
-
8/6/2019 Types of Insurance underwriters & integrated policies
3/9
COMMERCIAL INSURANCE
UNDERWRITERS
The largest group and includes the numerous companies offering acomplete range of conventional insurance services
In the field of structured finance the main underwriters are Lloyds ofLondon and AIG
LloydsLloyds
Lloyds is the best-known company in the structured finance segment
Fast and more-flexible procedure in the International market
AIGAIG
Complete range of insurance products
Specializes in the political risk insurance field
Can also provide equity for projects either directly or through its own orthird part managed closed funds
-
8/6/2019 Types of Insurance underwriters & integrated policies
4/9
GROUP CAPTIVE INSURANCE
UNDEERWRITERS
These insurers operate only with companies that
make subscription club payments to obtain their
insurance services.
The amount of coverage available is based on the
level of contribution to d subscription club that
each member is willing to make.
-
8/6/2019 Types of Insurance underwriters & integrated policies
5/9
MONOLINE INSURANCE
UNDERWRITERS
They are global financial insurance company and
their only line of business is financial insurance
(hence the term MONOLINE).
These are specialised underwriters with S&P ,
Moodys and Fitch offering adequate support
for project finance deals
Issues parties unconditional and irrevocable
guarantees to pay capital and interest for debts
at maturity.
-
8/6/2019 Types of Insurance underwriters & integrated policies
6/9
POLICIES INCLUDED IN STANDARD
INTEGRATED INSURANCE PACKAGES
Contractors all risks: This is the main insurancecomponent during the construction period
Financial risks: This component refers to bonding as
regards performance, bid/payment,maintenance/retention, and other business guarantees
Advance loss of profits: In its basic form it guaranteesdebt service during the construction phase of the project
Proffesional Indemnity: Concerns legal and contractualliabilities arisising from proffesional activities required bythe project
Public and product liability: coverage for liabilities arisingfrom damage to third party goods or property or damageto persons as well as third party financial losses
-
8/6/2019 Types of Insurance underwriters & integrated policies
7/9
OBJECTIVES OF
INTEGRATED POLICIES
The objectives of integrated coverage are as follows:
To create a package that can cover all aspects of risk mitigation and offer
profiles not provided by other products.
To arrange bonding facilities.
To generate a constant risk profile for the lender throughout the life of
the project.
To satisfy all insurance requirements by automatically activating event-
dependent components.
To allow the policy holder to assign and transfer coverage without
interrupting or diminishing risk coverage toward the lender.
-
8/6/2019 Types of Insurance underwriters & integrated policies
8/9
CONT
To provide coverage guaranteed by a lead underwriter.
To guarantee maximum coverage and competitive
premiums and to simplify the wording of policies.
To offer high added-value benefits, including loss
control, free appraisal services, specialized legalservices, consulting on guarantee, and complaints.
To provide flexible, adaptable coverage.
-
8/6/2019 Types of Insurance underwriters & integrated policies
9/9
THANK YOU
All the best