VEB.RF Presents Best Practice of Insurance Coverage for Large Projects
During the 16th Annual International ICG Conference on Corporate Insurance, VEB.RF together with its partners organised a round-table discussion on insurance practices for large projects funded through debt financing. The participants included Sber, Better Chance, Marsh-Insurance Brokers (Remind) and Sber Insurance. The round table was moderated by VEB.RF Director for Insuring Project Risks Konstantin Parasiuta.
The participants specified that the insurance of large long-term projects should be considered in a lot of detail, providing for conservative coverage for all risks whose transfer supports the insurance market.
“Insurance contracts for large projects should be impeccable in terms of commercial conditions most accurately selected and defined for a specific project, and enforceability and unambiguity of contractual provisions. “The phrase ‘We believe in the project’ is often heard from lending executives who take a decision on long-term financing of a large industrial or infrastructural project. Behind this phrase is months-long work of a large crew, including representatives of project initiators, banks, advisers and specialised institutions engaged in complex detailed due diligence (technical, financial, logistics, marketing, legal, etc.) of all material risks and aspects relating to a specific project.
The long-term practice of insurance structuring confirms that insurance due diligence should be properly integrated into the lending process and applied at the very first stage of project structuring,” said VEB.RF Director for Insuring Project Risks Konstantin Parasiuta.
Steady development by VEB.RF of insurance practice in project financing and its regular discussion with a wide range of participants, including the real sector, banks, insurance market participants, and insurance, legal or any other specialised advisers, helped to develop systemic insurance competencies adequate to the risks assumed by VEB.RF when performing investment activities.
SberCIB’s Executive Director Kseniya Novozhilova told about structuring of transactions related to financing of large projects, due diligence areas and specifics, and main insurance requirements.
The Better Chance partners, Ella Omelchenko and Yan Galin, focused on lender requirements to insurance structuring at the very start of projects funded through project financing.
According to Deputy General Director of Marsh-Insurance Brokers (Remind) Andrey Sheyn, insuring construction and installation risks, pledged assets, cargo, terrorism, environmental and entrepreneurial risks is a standard practice for project financing which has proved its importance and efficiency, including recent losses being successfully settled by the insurance market.
During the panel discussion, Sber-Insurance’s Executive Director Sergei Kuziachkin summarised the existing problems faced by insurers and related to insurance coverage calculation, different approaches to calculating the maximum possible loss, verification of risk reports prepared by insurance advisers, and interaction with the reinsurance market.
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