With the growing number of multinational construction projects on the rise in Africa, the importance of comprehensive insurance and risk management has come under the spotlight.
Tirelo Tsheoga, Head of Distribution, Sub-Saharan Africa at Chubb South Africa says compiling a well-conceived insurance roadmap for a mega construction project is a complicated undertaking.
“These mega construction projects cost anything from US$100 million upwards, hence insurance and risk management are crucial components that are factored in right from the planning stages of a project as these costs will form a significant part of the entire construction budget,” he explains.
Tsheoga notes that the process normally involves the appointment of an Engineering, Procurement and Construction (EPC) contractor who is generally responsible for all the activities from design, procurement and construction, to commissioning and handover of the project to the project owner.
Structuring a multinational insurance programme requires an in-depth understanding of the transactional elements of cross-border insurance, particularly as this relates to local tax and insurance regulatory requirements.
A thorough understanding of risks
“The final selection of insurance offerings on the table need to reflect local insurance legislation, adhere to international policy as well as offer a tax-optimised solution. It is a task that requires a great deal of input, not to mention the time spent on finalising it. There needs to be a thorough understanding of all potential risks, who bears or shares it, and mature risk management.
“Finding a solution that meets such a diversity of construction risks, especially across geographies, is an enormous task that needs early engagement of insurers. Ultimately, it requires strong and early collaboration between client, broker and insurer to develop the optimum risk management and cover solution,” concludes Tsheoga.