In the complex and long-term landscape of Public-Private Partnerships (PPPs), mastering Insurance and Guarantees in PPP Risk Management is a critical capability, as these financial instruments provide essential layers of protection against unforeseen events and non-performance, thereby enhancing project bankability, attracting private capital, and safeguarding the interests of both public and private parties. While effective risk allocation forms the bedrock of a PPP contract, certain risks—particularly those that are high-impact, low-probability, or beyond the direct control of either party—are best mitigated or transferred through specialized insurance policies and various forms of guarantees. This comprehensive training course is meticulously designed to equip public sector officials, project developers, financial institutions, legal professionals, and risk managers with the advanced knowledge and practical skills required to understand, structure, negotiate, and manage the intricate world of insurance and guarantees in PPP projects, ensuring robust risk transfer and financial resilience. Without robust expertise in Insurance and Guarantees in PPP Risk Management, stakeholders risk significant financial losses, project delays, and a failure to secure optimal risk protection, underscoring the vital need for specialized expertise in this critical domain.

Duration: 10 Days

Target Audience

• Public Sector Risk Managers and Procurement Officers
• PPP Unit Professionals
• Private Sector Project Developers and Sponsors
• Lenders and Financial Institutions (including ECAs and MDBs)
• Legal Professionals specializing in project finance and insurance law
• Insurance Brokers and Underwriters specializing in infrastructure
• Contract Managers overseeing PPP agreements
• Risk Managers in infrastructure companies
• Consultants providing risk advisory services for PPPs
• Anyone involved in the financial structuring and risk mitigation of PPP projects.

Objectives

• Understand the fundamental role of insurance and guarantees in PPP risk management.
• Learn about the various types of insurance policies relevant to PPP projects.
• Acquire skills in identifying insurable risks and structuring appropriate coverage.
• Comprehend techniques for utilizing different types of guarantees (e.g., performance, payment, political risk).
• Explore strategies for optimally allocating risk through insurance and guarantees.
• Understand the importance of reviewing and negotiating insurance programs and guarantee terms.
• Gain insights into legal and contractual aspects of insurance and guarantee provisions.
• Develop a practical understanding of claims management processes.
• Master the role of MDBs and ECAs as guarantee providers.
• Acquire skills in assessing the financial implications of insurance and guarantees.
• Learn to apply international best practices and guidelines for risk transfer.
• Comprehend techniques for ensuring comprehensive and cost-effective coverage.
• Explore strategies for managing the interface between insurance, guarantees, and the PPP contract.
• Understand the importance of due diligence on insurers and guarantors.
• Develop the ability to lead and implement robust insurance and guarantee strategies for PPPs.

Course Content

Module 1: Introduction to Insurance and Guarantees in PPPs

• The role of risk transfer in PPPs.
• Why insurance and guarantees are essential complements to risk allocation.
• Distinguishing between insurance and guarantees.
• Overview of the insurance and guarantee market for infrastructure projects.
• Consequences of inadequate insurance or guarantee coverage.

Module 2: Key Insurance Policies for PPP Projects (Part 1: Construction Phase)

• Construction All Risks (CAR) / Erection All Risks (EAR) insurance.
• Third-Party Liability (TPL) insurance.
• Professional Indemnity (PI) insurance for designers/engineers.
• Delay in Start-Up (DSU) / Advanced Loss of Profits (ALOP) insurance.
• Marine Cargo insurance for imported equipment.

Module 3: Key Insurance Policies for PPP Projects (Part 2: Operational Phase)

• Property Damage (PD) and Business Interruption (BI) insurance.
• Public Liability (PL) and Product Liability insurance.
• Machinery Breakdown (MB) and Boiler & Pressure Vessel (BPV) insurance.
• Environmental Impairment Liability (EIL) insurance.
• Cyber insurance for digital infrastructure.

Module 4: Performance Guarantees and Bonds

• Types of performance security: performance bonds, bank guarantees, letters of credit.
• Purpose: ensuring contractor/operator performance and financial compensation for default.
• Bid bonds and advance payment bonds.
• Retention money and parent company guarantees.
• Legal enforceability and call on guarantees.

Module 5: Payment Guarantees and Credit Support

• Types of payment guarantees: direct payment guarantees, take-or-pay contracts.
• Ensuring public authority payment obligations.
• Debt service guarantees from government or third parties.
• Letters of credit and escrow accounts for payment security.
• Role in enhancing project bankability.

Module 6: Political Risk Insurance (PRI)

• Definition and scope of Political Risk Insurance.
• Covered risks: expropriation, currency inconvertibility/non-transferability, political violence, breach of contract.
• Providers: MIGA, Export Credit Agencies (ECAs), private PRI insurers.
• Structuring PRI policies and claims process.
• Integrating PRI with government guarantees.

Module 7: Role of Multilateral Development Banks (MDBs) and ECAs as Guarantors

• Types of guarantees offered by MDBs (e.g., Partial Risk Guarantees - PRGs, Partial Credit Guarantees - PCGs).
• How MDB/ECA guarantees de-risk projects and mobilize private finance.
• Specific coverage provided by different institutions.
• Application process and requirements for MDB/ECA guarantees.
• Blended finance approaches leveraging MDB/ECA guarantees.

Module 8: Structuring the Insurance Program and Allocating Premiums

• Designing a comprehensive insurance program for the entire project lifecycle.
• Identifying insurable risks and determining appropriate coverage limits.
• Allocating insurance premiums between public and private parties.
• Self-insurance and deductibles.
• Role of insurance brokers and advisors.

Module 9: Legal and Contractual Aspects of Insurance and Guarantees

• Drafting insurance clauses in the PPP/concession agreement.
• Requirements for evidence of insurance coverage.
• Conditions for calling on guarantees and bonds.
• Subrogation rights and inter-creditor arrangements related to insurance.
• Governing law and dispute resolution for insurance/guarantee disputes.

Module 10: Claims Management and Dispute Resolution

• Procedures for notifying and submitting insurance claims.
• Role of loss adjusters and adjusters.
• Managing disputes with insurers.
• Claims process for guarantees and bonds.
• Lessons learned from complex insurance/guarantee claims.

Module 11: Due Diligence on Insurers and Guarantors

• Assessing the creditworthiness and financial strength of insurers and guarantors.
• Reviewing their track record in paying claims.
• Understanding policy exclusions and limitations.
• Ensuring adequate reinsurance arrangements.
• Legal and regulatory compliance of providers.

Module 12: Fiscal Implications of Guarantees and Insurance

• Accounting treatment of government guarantees (contingent liabilities).
• Budgeting for potential calls on guarantees.
• Impact of insurance premiums on project costs and affordability.
• Transparency and reporting requirements for government guarantees.
• Balancing risk transfer with fiscal exposure.

Module 13: Emerging Risks and Insurance Solutions

• Insurance for climate change-related risks (physical damage, transition risk).
• Cyber insurance for critical infrastructure.
• Pandemic risk insurance and business interruption.
• Innovative insurance products for new technologies.
• The evolving role of the insurance market in PPPs.

Module 14: International Best Practices in Insurance and Guarantees

• Review of international guidelines and policies on insurance and guarantees in PPPs.
• Comparative analysis of risk transfer mechanisms in different jurisdictions.
• Lessons learned from major international PPP projects.
• Adapting global best practices to local market conditions.
• Case studies of successful use of insurance and guarantees.

Module 15: Practical Workshop: Designing Insurance and Guarantee Strategies

• Hands-on exercise: Identifying insurable risks and recommending appropriate insurance coverage for a hypothetical PPP project.
• Workshop: Drafting key insurance and guarantee clauses for a PPP contract.
• Role-playing negotiation scenarios for insurance and guarantee terms.
• Analyzing the cost-benefit of different risk transfer options.
• Developing a comprehensive risk mitigation strategy using insurance and guarantees.

Training Approach

This course will be delivered by our skilled trainers who have vast knowledge and experience as expert professionals in the fields. The course is taught in English and through a mix of theory, practical activities, group discussion and case studies. Course manuals and additional training materials will be provided to the participants upon completion of the training.

Tailor-Made Course

This course can also be tailor-made to meet organization requirement. For further inquiries, please contact us on: Email: info@skillsforafrica.org, training@skillsforafrica.org Tel: +254 702 249 449

Training Venue

The training will be held at our Skills for Africa Training Institute Training Centre. We also offer training for a group at requested location all over the world. The course fee covers the course tuition, training materials, two break refreshments, and buffet lunch.

Visa application, travel expenses, airport transfers, dinners, accommodation, insurance, and other personal expenses are catered by the participant

Certification

Participants will be issued with Skills for Africa Training Institute certificate upon completion of this course.

Airport Pickup and Accommodation

Airport pickup and accommodation is arranged upon request. For booking contact our Training Coordinator through Email: info@skillsforafrica.org, training@skillsforafrica.org Tel: +254 702 249 449

Terms of Payment: Unless otherwise agreed between the two parties’ payment of the course fee should be done 7 working days before commencement of the training.