In some instances, the Owner Participant in an alliance agreement may procure insurance for the alliance as a whole. Different considerations will arise for an Owner where insurance is controlled by the Owner or the Non-Owner Participant. This includes the nature of the information Non-Owner Participants are required to provide. Alliance Participants need to understand the implications of the approach taken in connection with the specific project alliance terms. Similarly, where a committee is formed to deal with insurance issues, the parties need to be aware of the implications. For example, from an Owner perspective, there may be concerns about Non-Owner Participants controlling insurance if the cost is a project cost that will be neutral to the Risk or Reward mechanisms for the Non-Owners. In the same way, Non-Owner Participants may be concerned if Owner-controlled insurances are put in place that may affect Non-Owner rights.
In some cases, the alliance can be responsible for procuring, maintaining, reviewing and administering claims. It may be that each Participant is responsible for different insurance issues.
The numerous options and their implications need to be understood and considered in determining the approach that is ultimately agreed as the most appropriate for each alliance project. They should take into account the terms of the alliance agreement, the approach to insurance placement and the interests of the alliance Participants.
A more detailed discussion of Owner-controlled insurance versus control by Non-Owner Participants is in section 5.3.