The Industrial Special Risks Insurance and general liability Insurance are repriced every three years after the Operational Commencement Date. This is because the premium payable for these insurances can often fluctuate in accordance with market conditions unrelated to the Project. Accordingly, it is considered to deliver better value for money to have the cost of these insurances competitively repriced rather than requiring Project Co to fix a price for the Operational Phase. While the period of time before benchmarking can occur may be determined on a project specific basis, a period of less than three years creates an unnecessary administrative burden for all parties and should only be considered where fluctuations in insurance prices are so significant and regular that this is considered best value for money for the State.
Three months prior to each Insurance Review Date, Project Co must obtain separate quotations from three Reputable Insurers for annual total premium costs of obtaining the Industrial Special Risks Insurance and general liability Insurance required by the Insurance Schedule for the remainder of the Operational Phase.
The State will then select one quotation for each Benchmarked Insurance, which will form the basis of the benchmarking of the Insurance Component for the upcoming Insurance Review Date.
On each Insurance Review Date, if the Future Insurance Component of the Benchmarked Insurances is greater or less than the Insurance Component (CPI Indexed) of the Service Payment current at that time (the Existing Insurance Component), the Existing Insurance Component will be adjusted accordingly, save that in undertaking any such adjustment, any increase or decrease in the cost of obtaining the Benchmarked Insurance which is directly attributable to Project Co's or any of Project Co Associates' performance of the Services will be disregarded.