Project Co must review and test the insurance market vigilantly (and during the Operational Phase, no less than once every 12 months) to ascertain whether a Day 1 Uninsurable Risk or Uninsurable Risk has become an Insurable Risk.
If this is found to be the case, then Project Co must, unless otherwise directed by the State, procure the Insurance.
Where such Insurance is procured:
• between Financial Close and the Operational Commencement Date, the State must pay Project Co:
- if the risk is not insurable under an existing Insurance, an amount equal to the premium that is payable by Project Co for insurance of such a risk (when incepted and at each renewal date); or
- if the risk is insurable under an existing Insurance, an amount equal to the increase in the premium of the existing Insurance that is required to cover insurance of such a risk; and
• after the Operational Commencement Date, the Service Payment will be increased to reflect the additional or increased premium (as applicable) payable by Project Co for insurance to cover the risk.
If a Day 1 Uninsurable Risk is a terrorist act occurring on the Project Area, then unless the Insurance in question is one under which coverage is provided for a declared terrorist incident by operation of the Terrorism Insurance Act 2003 (Cth), Project Co will not be required to review and test the insurance market unless expressly requested by the State to do so. The State does not require automatic continual testing of the insurance market for such a risk given the cost impost of this and the low probability that such a risk will ever be insured.