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TREATY REINSURANCE FOR PROJECT INSURANCE PORTFOLIO

December 13, 2024

Yesterday, when I wrote the

January 30, 2025

X infrastructure company, based in

December 23, 2024

The following are the loss

January 29, 2024

The General Insurance Council introduced

January 18, 2024

Is compares the insurance cost

November 15, 2024

We see large number of

Reinsurance

TREATY REINSURANCE FOR PROJECT INSURANCE PORTFOLIO

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Sydney Opera House is a famous landmark. Its construction was started in 1958 and scheduled to be completed in 1963. It was finally completed in 1973.

Time overrun: 200%.

Original Estimate of the cost was Australian Dollar 7 million. Actual cost when finally constructed : Australian Dollar 102 million.

Cost Overrun: 1400%.

Time overruns and cost overruns are normal in projects-especially in the developing world.

Engineering treaties usually have a 7-year limitation -Project period plus maintenance period put together.

If a project, initially with project period of 4 years plus 2 years maintenance is ceded to treaty and more than one year extension is required. then, it might turn a nightmare for the cedant. Cannot cede to treaty and very difficult to get facultative support at that stage.

Hence, planning for possible time overruns and cost overruns has to be part of any decision to cede to a treaty.

Finally, one question: Should a treaty for project insurance be:

a) Risk Attaching basis with cleancut
b) Risk Attaching basis on runoff
c) Loss Occurring basis.

Blog by Atmaram Cheruvu

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