Commercial Risk Insurance
Commercial risk insurance enables investors and lenders to transfer a commercial risk (such as specified losses, damages, illness or death) to a third party, in return for the payment of a premium. The main providers are insurance companies and public agencies.
Other major risks, such as demand, operational and exchange rate risks, can be better mitigated through guarantees. More information on these can be found here.
Construction risk insurance is a major instrument used to mitigate risks (such as time delay, cost overrun, property damage and performance risk) in infrastructure projects, and is frequently requested in project contracts and from commercial banks. It often covers losses arising from property damage, and may also include:
- Construction All Risk (CAR): covers potential property damage to operations and assets on the site during construction
- Delay in Start-Up (DSU): covers additional interest costs, revenue losses and fixed costs resulting from a delay to project completion
- Party Liability Insurance: covers any claim by third parties in connection with construction risks
- Marine Cargo Insurance: covers damage of equipment during transport
The increase in infrastructure projects in Southeast Asia coincides with growing demand for insurance, which encourages private insurer companies to expand their activities in the region. Many insurance companies and brokers, as well as most of the top 25 global reinsurers, have established a regional hub in Singapore.