The essence of the project financing approach used in waste PFI/PPP contracts is that as far as possible risks are taken out of the project company responsible for providing the Services to the Authority and for raising the finance required. This is achieved principally by sub-contracting and, in part, by taking out appropriate insurance policies to transfer certain risks to the insurance markets in exchange for a fixed premium.
In negotiating the Contract the Authority and Contractor will have agreed an approach to insurance that works effectively within their overall risk management strategies and offers a value for money solution over the long-term. The Authority will have required the Contractor to take out and maintain certain insurance policies - the Required Insurances - on the basis that they are best placed to manage those risks.