Page 8 - issue 26
P. 8

8            Cover Story

        experienced  Underwriting  experts  and  of  internationally  accepted  standard  have explained this increase as general
        Brokers  with  technical  competencies  contractual  documents,  has  for  a  long  escalation  whilst  others  as  a  need  to
        and  vast  insurance  experience  work  time recognised the need to apportion  insure  additional  professional  fees
        closely  with  clients  to  conduct  risk  the risk of the contract site to a particular  following a loss.
        assessments and surveys to determine  party, normally the contractor and make
        the relevant covers required. The policy  one party responsible for the purchase  In  the  former  case,  where  adequate
        wordings  are  tailor-made  for  each  of insurance.                    escalation   is   included   there   is
        project  instead  of  offering  a  generic                              duplication  and  unnecessary  premium
        product across all projects. BIC also has  Insurance  is  also  a  product  that  is  is payable up front. In the latter case it
        a vibrant Claims division that ensures an  extremely price sensitive and often little  should be pointed out that the contract
        efficient claims management process.  cognisance is taken of the cover specifics  sum  insured  presents  the  cost  of  the
        Engineering covers include:         in relation to insurance pricing quoted.  permanent  and  temporary  works  as
                                            Some  policies  may  have  seemingly  set  out  in  the  contract  conditions.
        ●  Contractors  All  Risks  (CAR)  e.g.  for  attractive terms but the cover may not  Professional fees are either covered by
        infrastructure  projects,  such  as  roads,  be  comprehensive.    If  one  considers  a separate item in the policy or under
        bridges, tunnels, airports, harbours and  Contractors  All  Risks  cover,  some  the additional costs and expenses item
        hydroelectric power stations        examples of the differences include:  and not under this main contract sum
        ●  Erection All Risks Insurance (EAR)                                   insured.  Any  good  policy  will  include
        ●  Advanced  Loss  of  Profits  Insurance  ● Some policies restrict cover to the site  as  a  joint  insured,  if  required  by  the
        (ALOP)                              only and cover excludes transit, off-site  contract conditions, the architect, land
        ●  Contractors’  Plant  and  Equipment  storage and manufacturers premises;  surveyor,  quantity  surveyor,  engineer
        Insurance (CPE)                     ●Lack  of  additional  clauses  such  as  and any other advisor or consultant.
        ● Machinery Breakdown Insurance (MB)  surrounding  or  employers  property,
        ●  Loss  of  Profits  following  Machinery  servitude/road  reserve  indemnity  and  Contactors, Engineers and Principals are
        Breakdown Insurance (MBLOP)         beneficial occupation;              not  insurance  specialists  hence  there
        ● Deterioration of Stock Insurance (DOS)  ● Inadequate cover for additional costs  is  a  need  for  closer  cooperation  with
        ● Electronic Equipment Insurance (EEI)    and expenses such as professional fees,  insurance  specialists  at  various  times
        ●Business   Interruption   following  demolition and removal of property and  during a contract’s life span.
        Electronic Equipment Insurance (EEI BI)  expediting measures;
        ●  Civil  Engineering  Completed  Risks  ●Large  deductibles  or  first  amounts  With  respect  to  Liability  Insurance,
        Insurance (CECR)                    payable;                            Botswana  is  not  a  particularly  litigious
        ● Seamless Project Insurance        ●In  respect  of  road  and  reticulation  nation  compared  with  other  parts  of
                                            contracts,  restrictions  to  the  length  of  the  world  but  liability  claims  are  on
        When asked on  obsoleting of insurance  unsealed road and open trenches that  the  increase  both  in  number  and  in
        packages  related  to  the  engineering  are covered.                   value.  Minimum  liability  requirements
        sector,  CEO  of  BIC  Mr  Newton  Jazire                               including that of professional indemnity
        stated that BIC will continuously review  All  these  factors  coupled  with  large  are considered to be extremely low and
        its product lines in relation to the needs  deductibles  or  first  amounts  payable  have  increased  little  over  the  last  44
        of the Engineering Industry. Rather than  can reduce cover to near nothing in case  years. This is not withstanding the fact
        remove  covers,  BIC  looks  at  ways  to  of a big loss.               that the cost of projects have escalated
        make them more relevant to the market                                   dramatically over this period.
        as to ensure that all the risks faced by  Many  Contractors  All  Risks  covers
        Engineers are suitably mitigated through  will  automatically  provide  a  provision  Professional indemnity cover is insured
        quality insurance solutions.        for  escalation  in  contract  price  and  on an annual or policy period aggregate
                                            some  even  post  loss  escalation  and  basis.  So  potentially,  an  organisation
        Insurance is unfortunately a subject that  devaluation of anything between 10 and  could  exhaust  their  insurance  cover
        is  highly  misunderstood  in  Botswana  30 percent. The policy is then adjusted  limit  following  just  one  incident  and
        and in Africa in general. This relates not  at  expiry  on  the  final  contract  value.  then leave themselves exposed to any
        only to the need for insurance but also  Notwithstanding  this,  many  contracts  future  misfortune  which  results  in  a
        the general principles of insurance such  prepared by engineers and government  claim  against  them.  Little  heed  of  this
        as “Indemnity” and “Insurable interest.”  require the contract sum insured under  fact appears to be taken by the industry
        The  engineering  and  construction  the  policy  to  be  increased,  normally  on the basis that “it will never happen
        industry  however,  through  a  variety  by  10  or  15  percent.  Some  engineers  to me”!

        Issue 26  Feb-Mar  2020       
        Issue 26  Feb-Mar  2020       
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