2024年太平洋地区保险基础设施指南（英）.pdf

ASIAN DEVELOPMENT BANKA GUIDE TO INSURABLE INFRASTRUCTURE IN THE PACIFICAUGUST 2024ASIAN DEVELOPMENT BANKA GUIDE TO INSURABLE INFRASTRUCTURE IN THE PACIFICAUGUST 2024Creative Commons Attribution 3.0 IGO license(CC BY 3.0 IGO)2024 Asian Development Bank6 ADB Avenue,Mandaluyong City,1550 Metro Manila,PhilippinesTel+63 2 8632 4444;Fax[phone]www.adb.orgSome rights reserved.Published in 2024.ISBN 978-92-9270-849-8(print);978-92-9270-850-4(PDF);978-92-9270-851-1(ebook)Publication Stock No.SPR240394-2DOI:http:/dx.doi.org/10.22617/SPR240394-2The views expressed in this publication are those of the authors and do not necessarily reflect the views and policies ofthe Asian Development Bank(ADB)or its Board of Governors or the governments they represent.ADB does not guarantee the accuracy of the data included in this publication and accepts no responsibility for any consequence of their use.The mention of specific companies or products of manufacturers does not imply that they are endorsed or recommended by ADB in preference to others of a similar nature that are not mentioned.By making any designation of or reference to a particular territory or geographic area inthis document,ADB does not intend to make any judgments as to the legal or other status of any territory or area.This publication is available under the Creative Commons Attribution 3.0 IGO license(CC BY 3.0 IGO)https:/creativecommons.org/licenses/by/3.0/igo/.By using the content of this publication,you agree to be bound bytheterms of this license.For attribution,translations,adaptations,and permissions,please read the provisions andterms of use at https:/www.adb.org/terms-use#openaccess.This CC license does not apply to non-ADB copyright materials in this publication.If the material is attributed toanother source,please contact the copyright owner or publisher of that source for permission to reproduce it.ADB cannot be held liable for any claims that arise as a result of your use of the material.Please contact pubsmarketingadb.org if you have questions or comments with respect to content,or if you wish toobtain copyright permission for your intended use that does not fall within these terms,or for permission to use theADB logo.Corrigenda to ADB publications may be found at http:/www.adb.org/publications/corrigenda.Notes:In this publication,“$”refers to United States dollars unless otherwise stated.ADB recognizes“China”as the Peoples Republic of China.All photos are from ADB unless otherwise indicated.Cover design by Jake Ruiz.This guide was prepared by Willis Towers Watson(WTW)and supported by the Asian Development Bank and the WorldBank.It also benefited from the support of the Pacific Regional Infrastructure Facility(PRIF)and development partners including the Australian Department of Foreign Affairs and Trade and the New Zealand Ministry of Foreign Affairs and Trade.ContentsTables,Figures,and Boxes ivAbbreviations vExecutive Summary vi1.Introduction 12.Infrastructure Insurance Landscape in the Pacific 3Region-Specific Risks 3Insurance Industry in the Pacific 4Infrastructure Insurance Market in the Pacific 43.Insurable Infrastructure Risks 9Risks Throughout the Life Cycle of Infrastructure Projects 10Sector-Specific Risks 124.Insurance Products for Infrastructure 13Best Practices for Contractors to Obtain Insurance 13Insurance Requirements for Infrastructure 15Insurance Products Available by Country 165.Value of Implementing Risk Management and Reduction Measures 196.Challenges of Obtaining Insurance Services 22Overview of Challenges in Obtaining Insurance 22Risk Management Issues from the Insurers Perspective 23Constraints in Insurance Requirements During Procurement 247.Recommendations for Improving Access to Insurance During Procurement 26Risk Management Good Practices 26Risk Management Advice for Development Partners 27Sharing Information and Timing 29Procurement Strategies 31Recommendations for Government Agencies 338.Case for a Pacific Resilient Infrastructure Finance and Insurance Facility 34Role of a Potential Regional Facility 34Options for a Facility Platform 369.Conclusion 40Appendixes 421 Active Insurance Companies by Country and Their Relevant Product Offerings 422 Matching Identified Project Life Cycle Risks with Insurance Products 453 Information to Be Provided to an Insurer at an Early Stage for Contractors All Risk Policy 484 Contractors Operating in the Pacific by Project Value 495 People Interviewed,OctoberDecember 2023 50Glossary 51ivTables,Figures,and BoxesTables1 Infrastructure Insurance Market Categorization by Country in the Pacific 62 Nature of Risks by Key Infrastructure Life Cycle Stage 103 Type of Risks by Infrastructure Life Cycle Stage 114 Typical Insurance Policies for Contractors in the Pacific 145 Insurance Coverage Requirements from Development Partner Procurement Guidelines 166 Main Products Available in the Local Insurance Market per Country 177 Risk Management and Reduction Measures Across the Infrastructure Life Cycle 218 Example of Climate Risk Management/Reduction Measures in the Energy Sector 219 Benefits and Disadvantages of a Regional Facility Approach 39Figures1 Life Cycle of Infrastructure Projects 102 Considerations for Contractors When Obtaining Insurance for Infrastructure Projects 153 Pooling Projects into Diversified Risk Portfolios 36Boxes1 Issues in the Pacific that Deter Prospective(Re)Insurers 232 Example of Insurance Requirements Set Higher than Obtainable 24vAbbreviationsADBAsian Development BankDFATAustralian Department of Foreign Affairs and TradeFSMFederated States of MicronesiaIHL Insurance Holdings PacificMFATNew Zealand Ministry of Foreign Affairs and TradePCRICPacific Catastrophe Risk Insurance CompanyPNGPapua New GuineaPRIFPacific Regional Infrastructure FacilityNote:PRIF partners include ADB,DFAT,MFAT,European Union,European Investment Bank,Japan International Cooperation Agency,United States Department of State,and the World Bank Group.RMIRepublic of the Marshall IslandsWTWWillis Towers WatsonviResilient infrastructure projects support economic growth,generate jobs,and bolster local incomes.They are crucial to developing countriesin Asia and the Pacific and around the world as they strive to meet the Sustainable Development Goals and Paris Agreement commitments on climate change.To truly thrive,infrastructure requires the involvement of robust insurance markets to defray the inherent risks in roads,bridges,telecoms,power plants,and the like.Without appropriate insurance,investors may shy away from these ventures,capping economic potential.This guide provides a conceptual framework for obtaining insurance for infrastructure projects in the Pacific in accordance with industry best practices.It aims to improve knowledge and access to insurance within the region.Executive SummaryviiPacific Regional Infrastructure Facility(PRIF)partners,which consists of the Asian Development Bank(ADB),Australian Department of Foreign Affairs and Trade,New Zealand Ministry of Foreign Affairs and Trade,European Union,European Investment Bank,Japan International Cooperation Agency,United States Department of State,and the World Bank Group.have a pipeline of projects totaling more than$3.0 billion for 20232025,with nine projects topping$100 million,and six between$50 million and$100 million.A healthy insurance sector,involved early in the design stage of infrastructure projects,will get more projects off the ground and bolster economic resilience.It will ensure better project design for sustainable infrastructure built to meet climate and development challenges.Pacific Insurance Market.The Pacific countries are often small,far from major markets,and vulnerable to external shocks.They rely heavily on aid and are highly exposed to natural hazards such as tropical cyclones,flooding,drought,volcanic activity,earthquakes,and tsunamis.All of these factors complicate efforts to establish a viable insurance market in the Pacific.National insurance markets in the region lack presence and financial capacity,and contractors struggle to obtain appropriate pricing to insure infrastructure projects.Insurable risks and corresponding insurance products for infrastructure projects.Risks in projects,including natural hazards or project delays,can lead to huge losses in time and resources for the(re)insurers,contractors,development partners,and the Pacific governments.These risks can also disrupt implementation and completion of infrastructure projects,meaning the economic and social benefits will not be fully realized.The life cycle of an infrastructure project typically follows six stages with their key associated risks:Initiation.Cancellation of the project.Planning.Scope changes and complexity of technical feasibility.Design.Design errors and omissions,overruns in anticipated time frame.Construction.Poor safety procedures,accidents,delays,natural hazards.Operation and Maintenance.Inability to reach desired levels of service.End of Life.Regulatory issues concerning decommissioning and hazardous waste.Generally,risk is highest during construction and lowest during planning and design.Challenges of obtaining insurance.Contractors have trouble obtaining insurance in part because it is hard to understand what products and services insurers offer,or how to differentiate qualitatively between insurers.Based on the analysis and interviews undertaken for this guide,in many cases smaller contractors are unable to provide the information requested by insurers,leaving insurers unable to consider insurance coverage.Contractors are concerned by the limited time frames in which tenders must be prepared and brokers confirmed that this often leads to unexpectedly high premiums or no offer of insurance coverage at all.Key barriers that Pacific contractors face in obtaining insurance include the following:Insufficient information provided to the insurer,encouraged by inconsistent and/or piecemeal information requests from insurers.Lack of understanding by project stakeholders of the risks or location,including lack of suitable risk assessments.Insurance transactions that are too small or on a per project basis,which dont interest insurers.To obtain insurance policies,during contract bidding the contractor should do the following:i.Understand the insurers that operate in the market(including the types of policies they offer,upper limits and deductibles).ii.Investigate insurance legislation in the country where the works will be conducted(to establish whether they must first seek insurance in the country of works,or whether they can seek it in the international market,with or without requiring an exemption).iii.Decide whether to approach an insurer directly or through a broker.iv.Give special consideration to whether obtaining natural hazard insurance is required under the contract,as this is rarely available locally and coverage might need to be placed separately,outside of the contractors all risk insurance policy,through the international market.In addition to these steps,it is advised that contractors seek risk engineering surveys early in the design,enforce construction standards,follow building codes,and be viiiwilling to take on a larger portion of the risk through a higher deductible or excess.Risk reduction measures.Risk management including risk reduction measures lower the risks under the direct control of contractors before transferring residual risk to the insurance market,increasing the chances of accessing insurance and potentially reducing premiums.It is also in project stakeholders interest to ensure enhanced project design by incorporating risk reduction measures for more resilient and impactful investments.Insurers and brokers could also be involved in the definition of risk reduction measures and help quantify the economic costbenefit of such measures.Following are good practices in risk management for project stakeholders:Quantify the risksQuantifying the risks related to infrastructure construction is the first step toward managing them,and the basis for rationally priced insurance by reducing uncertainty and so improving the attractiveness of the project(and the contractor)to(re)insurers.Follow the building codeWhere a national building code exists,complying with the code is seen as a minimum requirement.Baseline national building code requirements are typically improved upon to obtain a more satisfactory design.Use performance-based designExpected losses can be significantly reduced for modest initial capital outlay beyond the minimum design standards and help improve risk management.Demonstrate construction quality managementContractors demonstrating strong governance,sound organizational culture,health and safety practices,quality assurance,and quality control can demonstrate good risk management.Good practices for development partners to follow and implement related to risk management include the following:Undertake,or mandate,consistent risk assessmentsThis should be undertaken for tropical cyclone and earthquake risks based on project location,to give comfort to underwriters that a proper and consistent risk assessment has been done,with designs reflecting these risks.Develop training programs in risk managementProvide training in the region to enhance local expertise in risk management,for example to conduct professional on-site risk engineering assessments,health and safety.Executive Summaryix Consider using SOURCE as a,which consists ofADB,Australian Department of Foreign Affairs and Trade,New Zealand Ministry of Foreign Affairs and Trade,European Union,European Investment Bank,Japan International Cooperation Agency,United States Department of State,and the World Bank Group.Promoted by G20,and supported by multilateral development banks,including ADB,African Development Bank,Asian Infrastructure Investment Bank,European Bank for Reconstruction and Development,European Investment Bank,Inter-American Development Bank,Islamic Development Bank,and the World Bank Group.Development partners and project owners should encourage the use of the platform.Improving access to insurance through information and timing.The following should be done to improve available insurance services and solutions:Project stakeholders,including development partners and contractors,should involve insurance industry brokers and insurance providers early in procurement.Insurance brokers and companies have a wealth of expertise in construction insurance and are present in most Pacific island countries.Contractors should carefully consider what information the insurance industry requires for each insurance policy type.They should be aware of the time required to properly collect,create,and present that information.Improving insurance requirements during procurement.Procurement teamsfrom development partners and governmentshave a major part to play.Many procurement processes are still risk-averse,and many contractors,especially smaller local ones,are