Delay in start-up insurance
Global privatisation has had a profound impact on the risk situations of various parties involved in large infrastructure projects. Both principals and contractors are being confronted with increasing financial risk exposure following the shift from governmental funding programmes to private financing.
In conjunction with this development, the approach towards private financing for large capital investments has also undergone considerable change. Principals now often collateralise loans with project assets and repay them purely on the basis of projected earnings.
The revenue generating capability of a project has thus become a critical financing factor and, accordingly, stringent conditions regarding delays in scheduled project completion have been added to contracts between financiers and principals, and particularly to those between principals and contractors. In turn, these conditions compel the parties involved to acquire the broadest possible insurance cover available in the market. This has prompted a sharp rise in demand for delay in start-up (DSU) cover, which is also known as advance loss of profit (ALOP) insurance.
This new brochure is designed to assist both underwriters and parties dealing with large construction projects in this challenging field of insurance. It provides sound fundamentals and discusses specific technical details and typical problem areas of delay in start-up insurance.
