For PFI/PPP projects in Northern Ireland, the most significant insurance issue is arguably that of criminal damage and terrorism. In the late 1960s, extensive damage to property in Northern Ireland was caused through terrorism which led to the enactment of the Criminal Damage (Compensation) (Northern Ireland) Order 1977 (the Criminal Damage Order). Damage to property as a result of terrorism would no longer be covered by insurance and instead the affected party could apply to the Compensation Agency for the loss suffered. A number of difficulties are faced by the private sector in PFI/PPP schemes in relation to such loss and damage. Firstly, the Criminal Damage Order may not provide the full reinstatement value of the asset which has been damaged or destroyed but it is now accepted that the public sector will bear the shortfall and may consider managing this risk through appropriate insurances. Top up terrorism cover is available in Northern Ireland. Secondly, the project may experience problems with cashflow until the claim has been settled and negotiations continue locally as to the role of the public sector in keeping the private sector whole in this event.
From a practical perspective, various issues need to be addressed. First, who can claim for loss if damage occurs; there is uncertainty as to whether the authority could claim, given the custom in Northern Ireland (formally enshrined in statute) that the Crown cannot sue the Crown. There is also some uncertainty as to whether a road for example is "property" for the purposes of the legislation, and in any case whether the contractor has a sufficient property interest in the asset to enable it to make the claim. However, as the political situation in Northern Ireland evolves, it may be the case in the future that insurance once again becomes available for occurrences presently covered by the Criminal Damage Order.