59.2  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) or statutory insurances298] in each case required under this Agreement becomes Uninsurable then:

59.2.1  the Contractor shall notify the Authority within [5] days of the risk becoming Uninsurable299; and

59.2.2  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 any sub-contractor of the Contractor; 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)300.

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298 That is, the insurances referred to in clause 57.1.1 and clause 57.1.2.

299 The Authority may elect to use the following alternative wording: "the Contractor shall notify the Authority of any risk becoming Uninsurable within 5 Business Days of become 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".

300 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 59.3 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.