Endorsement Clauses in Engineering All Risks Insurance with Taiwan''s Hydropower Project as Example.
Date Issued
2009
Date
2009
Author(s)
Tu, Yung-Min
Abstract
Engineering all risks insurance encounters difficulties in setting reasonable rates according to majority rule, and it is also hard to comply with the general insurance principles. A few factors contribute to the situation: high risks of engineering projects, large scale of differences in project uniqueness, and immense underwriting conditions. Due to frequent natural disasters and human-caused accidents, most international insurance companies keep Taiwanese engineering projects in their blacklist. It results in withdrawal of international reinsurance companies and lifted underwriting conditions. In addition, insurance companies attach endorsement clauses to limit damage compensation. In order to gain favor of the insurance company and the owner, and to avoid the loss of insurance, contractors have no choice but embracing the underwriting conditions and additional articles reluctantly. Therefore, contractors often need to increase the insurance deducible to lower the rate. Even though efforts are made to improve the situation, endorsement clauses to limit coverage began to emerge as replacements. Take the Article 133 in hydropower projects regulations for example, it states materials to be stored in places no lower than the highest water line over the past twenty years or the flood water level of the flood occurring every twenty years. The compensation for materials is limited to the amount for three-day usage only. Furthermore, if the endangerment is between June and October, the deducible will increase by the multiple stated in the contract. In fact, there are many difficulties for engineering when it comes to the height of material storage; the multiplied deducible also cuts back on security of rights of the insured. This paper seeks examples in hydropower projects, which claims the most difficulties in gaining insurance, and calculates fifty policies of a certain insurance company between 2006 and 2009. The discussion will circulate about some common endorsement clauses in the policy and go further into details of rates, deducible, additional articles, and content of the policy which have the most effects on the insured. There will be 3 cases of endangerment in the fifty policies reviewed, and they will be the basis from which extends the discussion about how additional articles influence the endangerment.The reasonableness of additional articles will be the focal point of the paper, and then we shall go through a general discussion about the fee structure of the controversial articles. Through collecting information on insurance policies and difficulties of engineering, This paper will then contain the three parties’ opinions on present additional articles, and propose suggestions on article and rate adjustments.
Subjects
engineering insurance
endorsement clauses
deducible
Type
thesis
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