Risk

Whitepapers & Reports

WIFIA
An Untapped Opportunity for Water P3s

The Water Infrastructure Finance and Innovation Act (WIFIA Program), which closed its first loans last year, has issued a Notice of Funding Availability which is open until July 5, 2019. This program provides low cost loans with flexible terms to support wastewater and drinking water projects through all project stages, including site acquisition, construction, rehabilitation or replacement. While the program is available to projects structured as Public-Private Partnerships (P3s), very few private parties have taken advantage of the program, with just a couple P3 projects having been invited to apply for financing with last year’s available funding. Congress has seen the value of the program and has consistently increased WIFIA’s budget authority each year since the program’s introduction, with credit capacity for FY 2019 of up to $12 billion worth of project value. Learn more about how this program has the potential to support future projects going forward.

Asset Performance Certainty
How Industry 4.0 Will Lead to Improved Asset Performance

The 4th industrial revolution is upon us and has the potential to have more of an impact on the global economy than the previous three revolutions combined. This new revolution is built on four key components: big data, internet of things, blockchain, and machine learning/artificial intelligence. These four components, when brought together, promise to bring about a significant reduction in risk, coupled with a massive increase in productivity. These changes will affect all industries but will have an outsized effect on the way we build and manage the built environment. Due to the sheer size of the inventory of physical assets and the ensuing total cost of ownership, even small improvements to productivity in the design, construction or management of these assets will massively impact the economy.

Public-Private Partnership Pursuit Risk and Opportunity Index (P3-Pro™)
Aon’s Construction & Infrastructure Global Market Update

Unprecedented losses over the past two years, totaling $237 billion, represent the most expensive two-year period in history. This along with some of the largest single loss events on record for the construction market means understanding where the market is moving is critical. Aon’s 2019 Market Outlook and 2018 Market Review provides insights and analysis into the Global Construction & Infrastructure market. Market conditions vary across geographies and understanding these nuances is imperative for firms doing business across regions. This report provides global insights, alongside those from individual markets, with global and regional results dictating the landscape for each region.Download the report to see Aon’s detailed regional analysis and outlook covering all major construction-related lines of insurance as well as a global reinsurance market review.

Public-Private Partnership Pursuit Risk and Opportunity Index (P3-Pro™)
Public-Private Partnership Pursuit Risk and Opportunity Index (P3-Pro™)

Aon has recently released the third edition of the Public-Private Partnership Pursuit Risk and Opportunity Index (P3-Pro™) for the U.S. and Canada. The index evaluates 16 key factors that affect the certainty of a P3 procurement in a given jurisdiction, including the legislative and regulatory regimes and the political environment that could impact the procurement of a project. In addition to a review of the last year’s changing procurement landscape at the state and provincial level in the U.S. and Canada, this year’s report includes a sample application of the analysis of the index to other types of jurisdictions with an analysis of Miami-Dade County. Take a look at how different factors can affect a P3 procurement.

Financial stability in the global construction industry may be on shaky ground
Financial stability in the global construction industry may be on shaky ground

Carillion’s recent collapse sheds light on the financial pressure put on the global construction economy as many face the challenges of tightening monetary policy, shrinking construction margins and prompt payment to the supply chain. There are signs of a potential contraction in contractors’ ability to supply their services, which could put the industry in a dire situation as global demand is forecasted to continue to grow at a faster pace than global GDP. There are a number of strategies that firms can adopt to protect themselves in the event of a potential contraction in construction capacity, many of which would be prudent steps to take in any economic climate.

Intellectual property concerns are moving into the construction industry
Intellectual property concerns are moving into the construction industry

For most of the construction industry, intellectual property concerns have historically been associated with copyright infringement. However, with increasing technological adoption by construction firms, lines are beginning to blur and the potential for patent, trade secret, copyright and trademark infringement continues to grow. Protecting your firm from potential litigation begins with proper documentation of ideas, discoveries and methodologies. The insurance protections for intellectual property claims are still developing, but may provide some level of coverage. Learn the types of intellectual property claims and their potential applications to the construction industry here.

Insured vs. Insured and Related Entities Exclusions Have Significant Implications for Professional Indemnity/Liability Insurance
Insured vs. Insured and Related Entities Exclusions Have Significant Implications for Professional Indemnity/Liability Insurance

Traditionally, professional indemnity/liability insurance contains exclusions for insured vs. insured (IvI) claims and claims between related entities. However, in complex contracts such as Design-Build, Engineering, Procurement and Construction, and Public-Private Partnership arrangements, an inadequately designed insurance program can affect parties’ abilities to claim against other parties that may be in the same joint venture or under the same holding company. There are multiple ways to address these concerns, some of which can be explored here

Industry Development: Weather Consulting and Risk Transfer Products
Industry Development: Weather Consulting and Risk Transfer Products

Day-to-day weather risks abound on construction sites and can delay project completion, leading to expediting costs or liquidated damages due to an insufficient weather contingency. Historically, the construction industry has relied on past experience or “gut intuition” to determine weather contingency baked into the project schedule. But without adequate quantification, risk mitigation efforts can lead to an inefficient risk allocation, either adding to contract costs with too large of contingency or putting contractors’ balance sheets at risk with inadequate contingency. With increased weather analytics and interested third parties willing to accept weather exposure, Aon can work with you to address project-related weather risk through new weather insurance products

Discovering the value representations & warranties insurance can bring to P3 transactions and other construction projects
Discovering the value representations & warranties insurance can bring to P3 transactions and other construction projects

In today’s increasingly competitive marketplace, delivering the greatest value means more than just offering the lowest bid. Delivering the greatest value entails offering solutions that overcome issues in finalizing deals, reduce buyers’ risks, add value to buyers’ offers in competitive bidding, and reduce the sellers’ risk of paying post-closing indemnification claims. One increasingly popular, but relatively underutilized, tool to address these risks is Representations & Warranties (R&W) insurance. R&W insurance protects the insured from losses resulting from unintentional and unknown breaches of reps and warranties and can reduce the amount of the deal value that would traditionally be held in escrow. When private equity firms and contractors consider selling their stakes in existing infrastructure assets on the secondary market, they should explore whether R&W coverage can play an advantageous role in addressing key risks. Click here for more information on the advantages of R&W insurance and how this coverage can be used by the infrastructure industry.

Getting to $1 trillion: a potential tool for revitalizing American infrastructure
Getting to $1 trillion: a potential tool for revitalizing American infrastructure

As the federal government explores innovative ways to boost infrastructure investment in the United States, many in the infrastructure community have pointed to Australia’s Asset Recycling program implemented in 2014 as a potential road map. The program offered states a 15% bonus on top of the purchase price for assets that are sold or leased to private operators, as long as the proceeds from the sale/lease would be used for infrastructure investment. The United States has had limited experience with asset monetization but a federal incentive program may influence states and municipalities’ decision-making. Though a number of hurdles exist in the current U.S. political and regulatory environment that have prevented this style of project from moving forward, click here to learn how an asset recycling program may be able to find success in some instances.

A Potential Firming Environment for Architects & Engineers Professional Liability
A Potential Firming Environment for Architects & Engineers Professional Liability

While much attention was focused on the potential for property rates to rise following a severe 2017 hurricane season, it has been the professional liability markets that have seen rising rates due to an increasing number of large losses that are affecting a significant portion of the markets in the US, Canada, London and Australia. Fewer new entrants to the construction professional liability market and consolidation of insurers has reduced available capacity, while M&A of construction and engineering firms has reduced professional liability premium volumes. See what factors are contributing to the changing professional liability markets across key global insurance markets.

Examining the Regional Variation in Insurance Costs for Construction
Examining the Regional Variation in Insurance Costs for Construction

As the construction industry continues to globalize, with firms doing increasing amounts of business outside their home countries, contractors must adapt their approach to risk management and insurance procurement procedures to reflect local requirements and practice. Read Aon’s analysis of regional variation of insurance costs and considerations across the world to help position yourself for success in new territories.

Construction Claims: The Importance of Claims Preparation
Construction Claims: The Importance of Claims Preparation

Ease and speed of settling claims is an important expectation with purchasing insurance to effectively transfer risk. However, construction claims can be extremely complex and require the expertise of engineers with specific experience. Many loss experiences can be contentious between the insured and the insurer but looking at a given claim through the perspective of an engineer can make a significant difference in how a claim is settled. Continue reading to see case studies demonstrating how employing a claims preparation team can lead to better results for construction claims.

Connecting Technology, Risk Management, and Finance Teams to Fund the Future State
Connecting Technology, Risk Management, and Finance Teams to Fund the Future State

The construction technology ecosystem has never been as active as it is today, with hundreds of companies coming to market seeking to optimize project management and to reduce project risk of all types. While every project participant, from project managers, to risk managers, to capital providers are all eager to reduce their exposure to risk, firms in the construction industry, for the most part, have not found alignment on how to successfully capitalize on this new technology – namely, how to fund the development of new technologies and apply them on projects. One potential solution to this hurdle would be for financial and risk capital providers, such as banks and insurance companies to consider investing in or provide funding for pilot projects for new companies that may significantly impact the risk on projects to which they are extending capital. Continue reading about a proposed framework for increasing communication between the technical side of firms and those responsible for communicating with capital providers.

Connecting Technology, Risk Management, and Finance Teams to Fund the Future State
Aon’s Role in Latin Finance Magazine’s Financing Innovation of the Year (2018)

Aon recently served as the insurance advisor and broker to CELSE on the Sergipe I Thermoelectric Power Plant in Brazil. The project won Latin Finance Magazine’s Financing Innovation of the Year for 2018, in part due to the decision to switch financing strategies from local banks to an international bank acting as global coordinator and bookrunner. This change in strategies brought with it new insurance requirements relatively late in the process that presented significant challenges to the forward progress of the project. To meet the demands of the new lenders, Aon called upon its regional expertise and deep relationships with insurance carriers to ensure the project could move forward and was adequately protected. See how Aon helped get this showcase project over the finish line and supported enhanced lender protections.

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