57.2  Risks Become Uninsurable

If a risk usually covered by [contractors' all risks insurance, property damage insurance, third party liability insurance, delay in start up and business interruption insurance (but not loss of profits)125 or statutory insurances]126 in each case required under this Contract becomes Uninsurable then:

57.2.1  the Contractor shall notify the Authority within [five (5)] Business Days of the risk becoming Uninsurable;127 and

57.2.2  if both Parties agree, or it is determined in accordance with the Dispute Resolution Procedure, that the risk is Uninsurable and that:

(a)  the risk being Uninsurable is not caused by the actions of the Contractor or a sub-contractor (of any tier); and

(b)  the Contractor has demonstrated to the Authority that the Contractor and a prudent board of directors of a company operating the same or substantially similar PFI businesses in the United Kingdom to that operated by the Contractor would in similar circumstances (in the absence of the type of relief envisaged by this Clause) be acting reasonably and in the best interests of the company if they resolved to cease to operate such businesses as a result of that risk becoming Uninsurable, taking into account inter alia (and without limitation) the likelihood of the Uninsurable risk occurring (if it has not already occurred), the financial consequences for such company if such Uninsurable risk did occur (or has occurred) and other mitigants against such consequences which may be available to such company,

the Parties shall meet to discuss the means by which the risk should be managed or shared (including considering the issue of self-insurance by either Party).128

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125  See Section 25.2.3 of SoPC4.

126  That is, the insurances referred to in Clause 55.1 and Clause 55.2 See Sections 25.2.1 and 25.2.2 of SoPC4 for discussion. This may include any waste specific cover that may have been specified (e.g. transit, machinery breakdown and their associated revenue interruption and environmental impairment liability) but should carve out loss of profit and should not include cover that is a Contractor risk (e.g. professional indemnity insurance).

127  At the Authority's discretion it may elect to use the following alternative wording: "the Contractor shall notify the Authority of any risk becoming Uninsurable within 5 Business Days of becoming aware of the same and in any event at least 5 Business Days before expiry or cancellation of any existing insurance in respect of that risk".

128  In the event that a risk becomes Uninsurable and the parties are required to meet to discuss how to manage the risk, the Authority should take into consideration the extent to which it may be deemed to be carrying out insurance business in the event that the parties are unable to agree and the provisions of Clause apply. In the event that the Authority believes that it would be conducting insurance business, it should consider whether it has the necessary powers and authorisations to do so.