Conduct a risk assessment and arrange insurance that can withstand loan application review.
In projects operated by a Special Purpose Company (SPC), the SPC must secure financing under limited liability, and the lending syndicate must carefully assess whether the project's profitability and risks have been appropriately transferred to insurance. This is called insurance due diligence.
As an insurance broker, we assess the overall risks of the project, evaluate the maximum loss amount for each risk (which is generally considered to be PML these days), and arrange the necessary property insurance for the SPC to receive financing from the lender. We also provide all the risk assessment results required by the lender during the loan application process. Furthermore, our risk consultants can directly explain the risk assessment methodology, reasoning, and validity to the lender to ensure accuracy.
If a lender determines that the insurance coverage is insufficient, they may require that a reserve fund for the remaining risk be allocated within the Special Purpose Company (SPC). In domestic projects, there is an increasing trend of cases where sufficient insurance cannot be obtained due to constraints such as the use and location of the facilities. Even in such cases, in order to minimize the amount that needs to be allocated from the reserve fund, it is important to appropriately assess the maximum risk and reach an agreement with the lender.