Tagged: Advanced Loss of Profits, Cargo, consequential loss, Delay in Start Up, losses, project cargo

Many infrastructure projects require that often expensive and sophisticated equipment must be installed and operating to capacity soon after it arrives on site. Many major infrastructure and mining operations involve the import of key equipment valued at hundreds of millions of dollars. These items are ordered to arrive on site on specific dates in order to keep costs to a minimum. A vital piece of new plant going astray or suffering damage during shipment can impact operations seriously, with the resulting losses and damages often far exceeding the cargo’s value.

And catastrophic incidents do occur. In August 2009 there was an accident in Talaja, India, when a bridge collapsed and a 128-wheel truck carrying a turbine to a power plant in Pipavav plummeted into the river below killing at least 5 of the crew and causing substantial damage to the cargo.

Marine consequential loss insurance exists to indemnify the insured in respect of expenses, standing charges, anticipated profit or actual loss of profit, including interest on loans etc., arising out of late or non-delivery, or damage to the cargo during transit. It is believed that the financiers in the Indian accident did not have the necessary insurance and are likely to be facing multi-millions of dollars in losses.

This type of cover is particularly relevant to those companies and governments embarking on major infrastructure projects such as new power generating plants, water desalination operations, port developments and construction of mining operations etc. In relation to these major projects, the cover is referred to as Delay in Start Up (DSU) or Advanced Loss of Profit (ALOP). Failure of a project to start on time can cost developers or financiers many hundreds of millions of dollars in lost earnings and interest.

As a specialist Lloyd’s marine insurance broker, FP Marine Risks is seeing a growing demand from clients seeking protection for these types of exposures. Although these risks are often very complex and can involve hundreds of millions of dollars, FP Marine Risks has access to world markets keen to provide competitive and individually tailored cover to insulate clients and financiers who could otherwise be facing disaster.

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