Financial Special Risk
Special Risks at Edge combines our leading position in the maritime and marine finance sectors and the long experience of the Team in the broadest spectrum of industry and commerce.
From our marine heritage we understand the movement of goods and commodities: but we also understand investment: we understand how finance and insurance are integral to making the most of the opportunities in a global and competitive environment.
Whether you are a financier looking to partner the Insurance Market in support of your lending, a trader looking to expand into challenging Markets, an investor looking to protect the balance sheet value of overseas interests, or simply looking to take advantage of the security and discipline this increasingly important specialist insurance can offer your business, our insight and market-leading position will help you capitalise on the benefits our covers can provide.
Marine Project Risk
Standard insurance products are a necessity. They protect the value of your assets, they are necessary to gain access to territorial waters, to secure charters and financing. The purchase of these insurances takes place after the event; the decision to acquire an asset, to commence its construction. These decisions in turn often comes after the negotiation and securing of a contract or business.
When insurance comes into use it is furthermore frequently associated with bad news; something has gone wrong, there may be personal injury, third party liability or pollution, and the media may be at your doorstep. Your shareholders and your charterers are not likely to be happy.
Both the cost of insurance and the cost of claims goes to your OPEX, which you are struggling hard to reduce. The purchase of a general insurance policy in this manner is an unavoidable necessity where one hopes the policy will not be called upon to respond.
Not so with Marine Project Risk.
Products here are often similar to financial instruments or options. Solutions within this practise are generally designed at the opportunity or business development stage of the project. A well-developed Special Risk solution can be the factor that wins you the contract, that enables financing to be completed, that persuades your Board to approve a project with risks with which you otherwise could not comfortably handle. In this way solutions delivered within the practise is part of an opportunity rather than its cost, can be factored into the tender, and sometimes even be passed onto charterers or other third party as a condition of you taking the contract.
Having won the contract, or placed that new building order, you may find yourself in the fortunate situation where market forces creates a significant appreciation of the value of the contract, even if it is still at the paper stage. This might be the case for instance with regard to options. Standard insurances will repay your investments in physical assets, but will normally not cover currency losses (or gains not realisable due to a cancellation of contract), site team costs, and above all appreciation of asset value or net present value of the contract.
Our Marine Project Risk team can deliver solutions to these exposures, and work very closely with our Financial Special Risk Practise.
Risks insured range from physical or non-physical events not impacting on your insured assets, including Force Majeure and onshore events, credit to political risks.
Our Marine Project Risks Practise in this ways mirrors the very nature of the global shipping industry; to constantly explore and look for new opportunity, to go where no one has gone before, to carry out projects with technical solutions never before seen. To bring trade, jobs and infrastructure where none existed.
At this end of the business, the rewards are high but so are also often the risks.
Marine Project Risks purchases are generally triggered by unconventional projects, unacceptable contract conditions, exotic jurisdictions, a political or financial crisis impacting the industry or your segment, or the realisation that one charter contract may represent an unacceptably high part of your balance sheet.
Purchasers of Marine Project Risks generally have a well developed risk management strategy and a good comprehension of what the insurance markets can do. They understand how the insurance industry overlaps and intersects with the financial industry, thus providing two arenas for risk management in addition to that adapted by less risk management attuned organisations; to passively accept the risk and therefore end up as a self insurer. Self insurance should be an active decision taken after all its implications have been understood;
“A risk ignored is a risk retained.”