The WIDP Contract contains a procedure for managing situations where a risk that was previously insurable (and is covered by the Required Insurances or insurances required by law) becomes Uninsurable.
In this instance, the Contractor must satisfy the Authority that it was not responsible for the risk becoming Uninsurable and that it would be reasonable for the Contractor or a similar UK business to cease operations as a result.
The Authority should seek insurance advice to confirm that the risk has indeed become Uninsurable. The Authority and the Contractor would meet to discuss how best to manage or share the risk. If there is a failure to agree, the WIDP Contract sets out alternative default positions, which may include termination of the Contract with compensation payable by the Authority to the Contractor, or a continuation of the Contract with the Authority effectively acting as the insurer whilst the relevant risk remains uninsurable. In the later case there should be a reduction to the Unitary Charge corresponding to the insurance premium previously paid by the Contractor.
The Contract Manager should consult with the Authority's Legal Department if the Contractor seeks to benefit from Uninsurability protection under this clause. Specialist insurance advice will also be needed to validate the claim that the relevant risks have become Uninsurable as defined by the Contract. Such expertise may be available within the Authority but if it is not then external advice should be sought.