3.24 When LCR prepared its proposal, its soundings in the insurance market revealed that there was limited appetite for underwriting construction cost overrun risk except at high thresholds of cost overrun. Bechtel and LCR persuaded the market to accept a greater degree of risk by demonstrating that they, as parties involved in managing construction risk, were considerably exposed to the financial consequences of overruns before exposure crystallised against the insurers.
3.25 Bechtel's agreement to increase its risk exposure facilitated the placing of £173 million of the £215 million of top level of overrun risk with insurance underwriters. Bechtel's ability to place the remainder of the programme was very limited after the terrorist events of 11 September 2001. Bechtel, in accordance with its agreement, took the unplaced risk and subsequently placed the remaining £42 million of the insurance programme with underwriters in late 2004.