Life and General Insurance

Advance Loss of Profits Insurance

This insurance is commonly referred to as ALOP (Advance Loss of Profits) and is designed to protect the interests of the Principal.  Other terms often seen are "Loss of Profits following Delay in Completion" or "Advance Rentals" or "Delay in Start Up". The policy offers cover against loss of anticipated earnings/profits due to the delay in commissioning of the project following a loss covered under the project insurance policies. It is normally written in conjunction with CAR/EAR Insurance. The cover is designed to protect the Gross Profit or Gross Revenue that the Principal anticipates earning following the completion of the Contract.  If there is a delay in the completion of the contract, for example as a result of a major fire, the anticipated income will not be available to meet the expenses which have been, and are still being incurred, and the expected net profit will be delayed.

 

Large and complex installations where the investments are high are adversely affected if the projects are delayed beyond the scheduled completion date. The project continues to incur the burden of interest on term loan, interest on debentures, wages and salaries, other miscellaneous administrative standing charges and interest on outstanding working capital, in addition to the loss of expected net profit which insured business could have earned had it commenced on the scheduled date.

 

The essential difference between a loss assessment under advance loss of profits cover and a loss assessment under business interruption cover is that there are no previous trading results with which to make comparison. 

 

What is covered?

• Loss of gross profits - based on anticipated sales, cost and prices.

• Loss of gross earnings- sales value of production less consumed stocks, supplies and services purchased.

• Increased cost of working - costs involved in minimizing the effects of the delay.

• Principal and interests - lending institutions’ interest in the portion of gross profit.

• Loss of rent - as a result of premises not being ready to earn rent.

• Special expenses - costs involved because of delay such as advertisement campaign etc.

 

Contractors Plant & Machinery

Insurance provides cover to Contractors Plant and Machinery against unforeseen and sudden physical damage whether at work or rest, while being dismantled or in the course of such operations or while being shifted, re-erected while such items are at the erection site.

 

Contractors’ machinery is exposed to the following hazards

 

• Overturning in rugged and unfamiliar terrain

• Boom collapse of cranes due to lifting problems or mechanical failure

• Exposure to the natural elements

• Security

 

Annual Policy (“Floater Covers”)

 

Annual policy is generally issued on a Contract Commenced basis. Cover will only be provided for works actually commenced during the policy period.  Another method of issuing an Annual policy is on a Turnover basis.  Under both the methods contract works that have already commenced before the inception of the policy will not be covered unless by arrangement but work commenced during the currency of the policy remains covered until completion.

 

Cover under "Floater Policy” is normally automatic for all work commenced by the Insured during policy period. Such policies are usually acceptable where risks are of a similar nature and as such, can be rated across the board and be clearly stated in the policy e.g. construction, alterations, additions, extensions of dwellings, flats, units, commercial buildings and industrial buildings.  However, Annual Policies for most types of operations can be considered depending upon the requirements of the contractors.  Floater covers are beneficial to the insured and the insurer for reasons like:

• Well spread risks

• Cost effectiveness

•  Minimum administration

 

Structuring of Floater Covers

Investigation / Clarification/ Discussion

The first step towards designing such a cover requires specific requirements of the contractor, needs assessment, careful clarification and consideration.  This is a major milestone to ensure that conceptual clarity is achieved, which is essential for smooth and economical handling of the cover.

 

The Form of the Cover

On a Turnover Basis?

Although used regularly for larger building contractors, this method is ideal where the Insured's contracts are of small or medium size, are usually of a similar nature with no great fluctuations in the insured periods and where, consequently, a larger number of contacts are executed during a year.

 

On an Individual Declaration basis?                

Individual declarations must be made before the contract works commence where such projects are of a large size. Monthly, Quarterly or annual declarations may be appropriate for CAR and EAR where a larger number of contracts are carried out.

 

What is the standard process for premium payments?

Except as in individual contract declaration policies, a deposit is made by the insured at the commencement of the policy.  The deposit will be adjusted on a date to be fixed, usually within 30 days of expiry of the period of insurance.

The premium must be paid against each declaration where individual contract declarations are to be made.

 

Why Ishan ?

If you are the contractor employed to build the project or the supplier installing and erecting the machinery, your contract probably requires you to arrange Contract Work insurance, naming the employer or buyer as a co-insured.  Have you or your risk manager thought of talking to "Ishan"?  We think you should.

 

In today's market there are several major factors which risk managers and companies must weigh before choosing a service provider:

• Financial security

• International organization

• Experience, know how and professionalism

• Support in claims settlements

• First class service before, during and after the contract works

• Capacity to handle even the largest of projects

 

After all, you need the broad insurance protection and stability that come from partnership with a broker of repute and a services provider which understands the complexities of your trade; a partner which can help when things go wrong.

 

We have built for many years upon our experience and improved our expertise to the stage where we can support your requirements and develop a customized project specific insurance program to meet all the risk transfer requirements of a project from the pre-construction phase until completion and beyond. 

 

Features & Services

• Risk Analysis

• Portfolio  and Risk Audit

• Safety and Health Services

• Liability Exposure Analysis

• Business Continuity Planning and Disaster Management

• Loss Prevention Services

• Claims Services

Our engineers, risk professionals and specialists assist insurers and clients in arranging Contract Works insurance packages designed to meet the specific needs of the customers.   Our specialists have been exposed to international best practices across industry sectors. We are totally customer focused in providing leading-edge products and services. Our endeavour is to create solutions which range from standard property and casualty insurance programs, both primary and excess, to strategic risk financing and integrated programs.

 

We can provide traditional products to insure your project or arrange tailor-made non-traditional solutions if required. We develop effective programs to minimize construction hazards and reduce our clients' exposure from loss due to careless or negligent job-site practices. Our employees are available for consultation at all times, not only when a claim arises.