Large infrastructure EPC (engineering, procurement, construction) projects involves multiple layers of complexity. From the financial implications to the operational risks, there are many challenges companies face when they enter into the insurance process. The construction industry is fraught with risk, and when you are in charge of a large infrastructure EPC project, that risk increases exponentially. The process of ensuring a project can be a daunting one for those unfamiliar with it, which can lead to mistakes and causes severe losses in the long run. “Insurance is the last line of défence in managing risks in large infrastructure EPC projects”.
It is essential that the insurance program is well-designed and adequately covers all potential risks. These projects require specialized insurance programs. These insurance programs typically include various types of policies, such as engineering all risks (EAR) insurance, contractor’s all risks (CAR) insurance & third-party liability insurance etc.
Challenges of insurance program in large Infrastructure projects:
In this section, we will explore the challenges that arise when managing insurance programs for these projects. There are often multiple stakeholders involved in these projects & each of these stakeholders may require different types of coverage, and it can be challenging to coordinate these requirements. Contractors need to work closely with their insurance brokers to design comprehensive insurance programs that adequately cover all parties involved in the project. Disputes and compliance issues can also arise when managing insurance programs for projects. In many cases, there may be disagreements between the contractor and the owner over the scope or adequacy of insurance coverage. Additionally, contractors need to ensure that they are complying with all relevant insurance regulations and laws. Failure to comply can result in legal penalties and other consequences. Contractors need to be vigilant about compliance and prepared to handle disputes that may arise over insurance coverage. Finally, coordination and communication can be challenging when managing insurance programs for large infrastructure projects.
How the broker help in effective claim settlement process:
Effective claim settlement is crucial to ensure that any financial loss due to unforeseen events is recovered as quickly as possible. The role of a broker in achieving an efficient claim settlement cannot be overstated. When claims are filed, brokers act as the point of contact between clients and insurance companies. They help clients prepare and submit all necessary documents required for claim processing while ensuring compliance with all legal requirements. This process can be time-consuming and technologically challenging for clients, especially if they lack technical knowledge or experience with insurance claims.
In addition to preparing and submitting claims, brokers also play a vital role in conflict resolution between clients and insurers during the claim settlement process. They work closely with both parties to ensure that disputes are resolved amicably and efficiently. Brokers often have established relationships with insurers, which can help increase the chances of successful claim settlement. They understand how insurers handle claims and can provide insight into what steps are needed to achieve a favourable outcome. Another way brokers help in effective claim settlement is by negotiating claims on behalf of their clients. Brokers are skilled at analysing policies and identifying areas where claims may be underpaid or denied. They have the expertise to negotiate with insurers to obtain a fair settlement for their clients. Brokers also have access to a wide range of resources, including databases and legal support, to help them negotiate the best settlement possible.
Best practices for claim settlement:
*It is important to assess the risks involved in the project early on and identify any potential gaps in the insurance coverage. A thorough risk assessment should be conducted with the involvement of all stakeholders.
*Once the risks are identified, it is important to review the existing insurance policies to ensure they cover all potential risks. Any gaps in coverage should be identified and addressed early on.
*Project contracts should include clear and comprehensive insurance requirements to ensure all parties have adequate coverage and that responsibility for any losses is clearly defined.
*Clear and effective communication is key to the success of any insurance program and claim settlement process. A communication plan should be developed to ensure that all stakeholders are informed at every stage of the process.
*An effective loss prevention plan can help minimize the likelihood of insurance claims. This can include measures such as regular safety inspections, employee training, and regular equipment maintenance.
*A thorough claims management process should be in place to ensure that any claims are handled efficiently and effectively. This includes documenting and reporting all claims promptly, verifying the claim, and working with insurers to reach a favourable settlement.
