Owner Controlled Insurance Programmes (OCIP) for Infrastructure Development Projects – Q2/21

The challenge in organizing a comprehensive insurance programme for Infrastructure Development Projects is that relying solely on the Contractors’ own insurances will not provide the depth and scope of cover sufficient to insure against the multi-faceted risks incumbent to such a large scale development.

Our highly experienced, specialist international development and construction team places and co-ordinates major construction and operating programmes across the globe.

We provide bespoke cover for contractors and owner-controlled programmes across a range of industries including mining, energy, ports and terminals, power, renewables and transport infrastructure.

Working for major international companies, as well as locally based operators and contractors, our team act on behalf of all key stakeholders including project owners and sponsors, contractors, special purpose companies, banks, engineers, governments and public authorities.

We support our clients through the development of risk allocation and the marketing strategy, liaison with the project lenders, the design of policy wordings, the placing of the agreed programme and managing ongoing servicing through development and operation.

This approach means our Clients benefit from:

• A wide range of policies available including environmental risks, delay in start-up, pre-handover coverage (seamless construction to operational coverage), out-put performance coverage and terrorism / political risk.
• A fully integrated and effective strategy to de-risk the project co-ordinated with in-territory brokers and Insurers, and global insurance markets.

Construction Phase

Matrix recommend that an appropriate approach would be for the client themselves to manage the various Project insurance requirements by organizing a “Owner Controlled Insurance Programme” (OCIP) to cover all aspects of the construction and erection insurance requirements of the venture. This approach will provide an extremely broad definition of “Insured Persons” and a Contractor Controlled Insurance Programme (CCIP) is not likely to provide as wide cover.

Project Risks

The project risks which can be included as Owner Controlled Insurance Programmes are:

• Construction and Erection “All Risks”
• Political Violence
• Delay in Start-Up (DSU)
• Construction and Erection Third Party Liabilities
• Environmental Impairment Liability – insuring against specific pollution liability
• Marine Cargo and Marine Cargo DSU – insuring the equipment during shipment and any delay arising from its loss.

Other Financial Risks

With the emphasis on further de-risking projects, Matrix have also been involved in arranging protections such as:

• Political Risks including Expropriation, Forced Abandonment, Selective Discrimination, Forced Divestiture, Currency Inconvertibility/Exchange Transfer Embargo and Arbitration Award Default
• FX currency hedging
• Domestic credit
• Parametric weather insurance

All depending on the requirements of individual projects.

Third Party Contractors’ Insurances

Even with implementation of Owner Controlled Insurance Programme covering the assets, revenue and liabilities of the project, we would expect the EPC Contractors to retain responsibility for certain insurances. All these arrangements need to be monitored as part of the project management and Matrix can provide appropriate guidance.

Operational Insurances

The Construction insurances will apply solely to the actual construction phase risks. Once the project has reached final completion, the operational insurances below will need to be put into place. Some of these may need to be phased in at the appropriate time during the later stages of the project.

Responsibility and roles will be determined under the O&M contracts. However, Matrix will organize the entire suite of ongoing insurances including:

• Property Damage (PD) – this will provide “All Risks” cover for Buildings, Plant, Machinery, General Contents, Computers etc
• Business Interruption (BI)
• Mechanical and Electrical Equipment Breakdown
• Public & Products Liability
• Workers Compensation/Employer’s Liability
• Employee Benefits
• Business Travel and Personal Accident
• Motor Fleet

Matrix Capabilities and Experience

Matrix Global Services was founded in 2000 and is run by a team of highly experienced insurance and finance professionals, all of whom have extensive experience of designing, delivering and administering projects covering the whole spectrum of business types and sectors, from SME and mid-cap through to multi-territory international businesses.

With operations in the UK and the USA and the reach and ability to work with Clients around the world, Matrix has established itself as a “go-to” provider of bespoke insurance and financial structuring solutions.

Matrix provides its clients with the independent, totally transparent insurance, risk management and specialist technical support they require, providing each of them with a clear view and informed strategic assessment of the full range of the available options.

The expertise of the multidisciplinary Matrix team, allied to its in-depth knowledge of and strong, established, connections with the market for insurance and insurance services and the financial community, enables Matrix to provide a complete end-to-end service for the formulation and delivery of the solutions its Clients require; from programme conceptualization and design, through market presentation and negotiation, to implementation and the provision of ongoing administration and support.

” The challenge in organizing a comprehensive insurance programme for Infrastructure Development Projects is that relying solely on the Contractors’ own insurances will not provide the depth and scope of cover sufficient to insure against the multi-faceted risks incumbent to such a large scale development. “

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Please Contact Us for more information on how Matrix assist investors in de-risking and enhancing the security of their investments, through the application of sophisticated insurance and risk solutions that adjust and reduce risk.