PARTS OF the Channel Tunnel Rail Link were uninsured this week because of the collapse of Independent Insurance, NCE has learned.
CTRL client Union Railways has emerged as one of the major construction industry creditors, topping a list of companies forced to find new insurance after the company went into liquidation.
Independent Insurance went into liquidation last month after the failure of a rights issue sparked by fears of massive losses on four reinsurance policies.
An NCE straw poll of contractors and consultants revealed that Bovis Lend Lease, Balfour Beatty, Amec, Carillion, Alfred McAlpine, Mott MacDonald, Murphy, Allen and MJ Gleeson also held Independent policies, although all said the effect would not be significant.
The Dublin Light Rail Project, which was insured by the firm, is being insured again at an estimated doubled premium price of £1.2M.
CTRL client Union Railways opted to insure the £5bn project itself rather than price it into contracts. 'We went for an all embracing form of insurance which saves us a lot of money rather than using different contractors' insurance, ' said Union Railways head of public affairs Bernard Gambrill.
'The policy is with a basket of companies of which Independent Insurance was one. We are trying to renegotiate the parts of the works insured by Independent. These are now uninsured and the project is carrying its own risk on these sections, ' said Gambrill.
He refused to comment on what proportion of the works was insured or the cost of the premiums. The cost of cover for the whole of the CTRL is likely to run into tens of millions of pounds. Independent would have provided a proportion of this.
The CTRL policy covers all risks on the project, including all construction risks and those to third parties such as Railtrack.
Only insurance required by law to be held by contractors - employers' liability and vehicle insurance - is not covered by the CTRL policy.
However, the collapse could expose Union Railways to large claims which it may partly have to foot itself. Massive claims for bad weather are being negotiated, including one believed to be for 'tens of millions' on Contracts 420 and 440.
A claim for damage to a bridge destroyed in a polystyrene fill fireball on Contract 330 is also under discussion (NCE 29 March). Union Railways confirmed that the bridge at Brewers Road was part insured by Independent.
The partnering approach on the CTRL means claims are agreed between Union Railways and contractors before the insurance company is approached. It is not clear if this will be affected in cases where Union Railways may have to cover some of the claims itself.
The impact of the collapse has been felt throughout the industry. Firms face the cost of replacement insurance premiums which are likely to be much higher because of rising prices and Independent's cut-price rates. Otherwise they will have to stump up for claims which are unlikely to be honoured by the liquidated firm.
Only policies which are legally required by law in the UK, such as employers' liability, are covered by the Policyholders' Protection Board safety net. Claims under non-mandatory policies such as professional indemnity cannot be claimed from the scheme and would be borne by the contractor or consultant.