Insurance for high speed rail

The building and operation of high speed rail lines present investors and operators with complex insurance challenges. While the core risks are in many ways quite straight forward, the contractual environment that inevitably exists means that risk allocation between the parties involved and the insurance of those risks needs careful consideration, expert knowledge and experience, and tailored solutions.

It is often the case that risk allocation centres on the build phase and limited attention is given to the operational stages, which are invariably set out over far longer periods (five to seven year build phase, 30 year operational phase is not untypical) - and insurance solutions have followed that format.

While this has generally meant the build phase risk allocation and insurances are adequate, the operational phase often suffers from poor and even inappropriate risk allocation and insurances that do not properly protect the various stakeholders. Further, the interface between build and operation phases becomes a significant potential 'insurance gap'. A poorly thought out approach can lead to difficulties and inflated insurance costs for many years ahead.

A more sensible approach is for those considering risk allocation and insurances to view the project as a whole and to look at 'cradle to grave' solutions from insurance advisers and insurers. The insurance market is now capable of providing solutions which ensure a seamless transfer from construction to operational risk, though many brokers lack the knowledge or expertise to take advantage of this.

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