Participants may seek to rely on their existing insurance policies, amended as appropriate, to cover the risks associated with the project. Since these policies are already in place, and premiums are already being paid, the costs associated with this approach may be far less than the costs associated with project-specific insurance (see (c) below).
However, as the existing policies have not been tailored specifically for the project, they may not adequately address or respond to relevant risks that may arise. Consequently, the Participants need to conduct a detailed risk analysis and review their existing insurance policies to identify gaps in coverage.
Assuming gaps do exist, the Participants, in consultation with skilled advisers (and insurance brokers), need to ascertain whether they can to deal with the gaps through appropriate amendments or extensions to the existing insurance policies, or by varying the cover, and what the cost will be. Another option may be for the alliance Participants to recognise the gaps and manage the risks through improved risk management.
Unless each policy is appropriately amended or endorsed, the no claim principle could prejudicially affect insurers' right of subrogation (the right of the insurer to step into the insured's shoes and sue another party or insurer who may be liable for or caused or contributed to the cause of the loss) and consequently an insured's rights to recover under a policy.