Part 4 - Broker's letter of undertaking
To: The Authority
Dear Sirs
CONTRACT DATED [♦] ENTERED INTO BETWEEN [♦] LIMITED ("SERVICE PROVIDER") AND [♦] ("AUTHORITY") ("CONTRACT")
1 We refer to the Contract. Unless the context otherwise requires, terms defined in the Contract shall have the same meaning in this letter.
2 We act as insurance broker to the Service Provider in respect of the Required Insurances and in that capacity we confirm that the Required Insurances which are required to be procured pursuant to clause 53 (Insurance) and Schedule 27 (Insurance Matters) of the Contract:
(a) where appropriate name you and such other persons as are required to be named pursuant to the Contract for their respective interests;
(b) are, in our reasonable opinion as insurance brokers, as at today's date, in full force and effect in respect of all matters specified in the Contract; and
(c) all premiums due to date in respect of the Required Insurances are paid and the Required Insurances are, to the best of our knowledge and belief, placed with insurers which, as at the time of placement, are reputable and financially sound. We do not however make any representations regarding such insurers' current or future solvency or ability to pay claims; and that
(d) the endorsements set out in Part 3 to Schedule 27 (Insurances Matters) of the Contract are in our reasonable opinion as at today's date in full force and effect in respect of the Required Insurances.
3 We further confirm that the attached cover notes confirm this position.
4 Pursuant to instructions received from the Service Provider and in consideration of your approving our appointment (or continuing appointment) as brokers in connection with the Required Insurances, we hereby undertake in respect of the interests of the Authority (and all other parties which should be insured under any of the Required Insurances) in relation to the Required Insurances:
(a) Notification obligations
(i) To notify you at least 30 days prior to the expiry of any of the Required Insurances if we have not received instructions from the Service Provider to negotiate renewal and in the event of our receiving instructions to renew, to advise you promptly of the details thereof.
(ii) To notify you at least 30 days prior to ceasing to act as brokers to the Service Provider unless, due to circumstances beyond our control, we are unable to do so in which case we shall notify you as soon as practicable.
(iii) To pay into the Joint Insurance Account without set off or deduction of any kind for any reason all payments in respect of claims received by us from insurers in relation to the Required Insurances specified at clause 53.12.2 (Insurance) of the Contract.
(b) Advisory Obligations
(i) To notify you as soon as reasonably practicable any default in the payment of any premium for any of the Required Insurances.
(ii) To notify you if any insurer cancels or gives notification of cancellation of any of the Required Insurances, at least 30 days before such cancellation is to take effect or as soon as reasonably practicable in the event that notification of cancellation takes place less than 30 days before it is to take effect.
(iii) To notify you as soon as reasonably practicable of any act or omission, breach or default of which we have knowledge which in our reasonable opinion may either invalidate or render unenforceable in whole or in part any of the Required Insurances or which may otherwise materially impact on the extent of cover provided under the Required Insurances.
(c) Disclosure obligations
(i) subject to the prior written consent of the Service Provider (and we undertake to notify you as soon as reasonably practicable if such consent is withheld) to disclose to insurers all information made available to us from any source provided to those of our employees directly involved with the placement of the Required Insurances in our capacity as insurance broker to the Service Provider, including any fact made known to us from any source, change of circumstances or occurrence notified to such employees, which in our reasonable opinion is material to the risks insured against under the Required Insurances and which properly should be disclosed to insurers, or in accordance with the policy terms and conditions of the relevant Required Insurance, as soon as reasonably practicable after we became aware of such information, fact, change of circumstance or occurrence whether prior to inception or renewal or otherwise;
(ii) To treat as confidential all information so marked or otherwise stated to be confidential and supplied to us by or on behalf of the Service Provider or the Authority and not to disclose such information, without the prior written consent of the supplier, to any third party other than those persons who, in our reasonable opinion have a need to have access to such information from time to time, and for the purpose of disclosure to the insurers or their agents in respect of the Required Insurances in discharge of our obligation set out at clause 4(c)(i) of this letter. Our obligations of confidentiality shall not conflict with our duties owed to the Service Provider and shall not apply to disclosure required by an order of a court of competent jurisdiction, or pursuant to any applicable law, governmental or regulatory authority having the force of law or to information which is in the public domain.
(d) Administrative obligations
(i) To hold copies of all documents relating to or evidencing the Required Insurances, including but without prejudice to the generality of the foregoing, insurance slips, contracts, policies, endorsements and copies of all documents evidencing renewal of the Required Insurances, payment of premiums and presentation and receipt of claims.
(ii) To supply to the Authority and/or its insurance advisers (or the Authority's or its insurance advisers' authorised representatives) promptly on written request copies of the documents set out in clause 4.4.1 of this letter, and to the extent available to make available to such persons promptly upon the Authority's request the originals of such documents.
(iii) To administer the payment of premiums due pursuant to the Required Insurances such that, in so far as we hold appropriate funds, all such premiums shall be paid to insurers in accordance with the terms of the Required Insurances.
(iv) To administer the payment of claims from insurers in respect of the Required Insurances ("Insurance Claims") including negotiating settlement of Insurance Claims presented in respect of the Required Insurances.
(v) Collating and presenting all information required by insurers in relation to Insurance Claims presented in respect of the Required Insurances.
(vi) In so far as it is relevant and practicable, liaising with and reporting to the Authority throughout the settlement, payment and administration of such Insurance Claims.
(vii) To advise the Authority as soon as reasonably practicable upon receipt of notice of any material changes which we are instructed to make in the terms of the Required Insurances and which, if effected, in our reasonable opinion as insurance brokers would result in any material reduction in limits or coverage or in any increase in deductibles, exclusions or exceptions.
(viii) To advise the Authority in advance of any change to the terms of, or any lapse, non-renewal and/or cancellation of any policy maintained in respect of the Required Insurances.
(ix) To use our reasonable endeavours to have endorsed on each and every policy evidencing the Required Insurances (when the same is issued) endorsements substantially in the form set out in part 2 to Schedule 6 of the Contract.
(e) Insurance cost reporting procedures
(i) to prepare following request, at the expense of the Service Provider, a joint Insurance Cost Report on behalf of both the Service Provider and the Authority in accordance with the Insurance Review Procedure as set out in clause 53 (Insurance) of the Contract. We shall ensure that the information in the Joint Insurance Cost Report is fairly represented, based on the information available to us.
5 Notification Details
Our obligations at clause 5 of this letter to notify or inform you shall be discharged by providing the requisite information in hard copy to:
[ ]
We shall supply further letters substantially in this form on renewal of each of the Required Insurances and shall supply copies of such letters to those parties identified to us by the Authority for such purposes.
6 Save insofar as we have given agreements or representations in this letter, it is to be understood by the Authority that they may not rely on any advice which we have given to the Service Provider, and we do not represent that the Required Insurances are suitable or sufficient to meet the needs of the Authority which must take steps and advice of its own as it considers necessary in order to protect its own position
7 The representations and obligations set out in this letter are subject to our continuing appointment as insurance brokers to the Contractor in relation to the Required Insurances concerned, and following termination of such appointment our immediate release from all our obligations set out in this letter to the extent those obligations arise on or after the termination, and subject to any right of lien we may have over the policy and policy documents regarding the Required Insurances, arising through common law or otherwise.
8 Our aggregate liability to any persons companies or organisation who acts in reliance on this letter, or on any other broker's letter of undertaking issues by us in respect of the Required Insurances for this Project, for any and all matters arising from them and the contents thereof shall in any and all events be limits to the sum of [£5,000,000] even if we are negligent. We do not limit liability for our fraud.
9 The letter is given by us on the instructions of the Service Provider and with their full knowledge and consent as to its terms.
Yours faithfully
…………………………………………………..
For and on behalf of Service Provider's broker