Insurance Journal (3rd Quarter 2021)

Guest Contribution
CECR
Insurance
Nasir Siddique
ACII (UK), CPCU (USA), MBA (I & RM)
AGM / Team Lead (Underwriting)
IGI General Insurance Limited
This report is an IMIA paper dealing
with the subject of Civil Engineering
Completed Risks insurance (CECR).
It has been written to provide
background into the coverage and the
drivers for buying CECR insurance
and underwriting aspects.
CECR insurance is a relatively new
form of insurance and there is a lot of
uncertainty regarding whether it
should be written by engineering or
property underwriters. It may also be
d e s c r i b e d a s ' C o m p l e t e d
Construction Insurance' (CCI) or
simply Property Insurance.
CECR is an insurance cover for
existing structures where fire is not
the predominant exposure. The cover
can be on an “all risk” or “named
perils” basis.
Although many people consider civil
engineering structures to be immune
from losses recent global events have
highlighted the large losses that may
arise. Recent catastrophic events in
world have given rise to concerns
with regard to the coverage provided
by this insurance and the large losses
that may occur;
In Australia extreme rainfall caused
flooding to an area the size of France
and Germany combined in Northern
Queensland alone.
Chile suffered an earthquake of 8.8
magnitude which killed hundreds of
people. It was so powerful it is also
believed to have shifted the earth
from its axis.
Haiti also suffered an earthquake that
is believed to have killed 220,000.
Sadly Haiti does not apply the same
building codes as Chile which
resulted in many more buildings
collapsing and a much higher loss of
life. Unfortunately Haiti also has far
less insurance coverage which results
in a lack of funds to rebuild to
previous standards, let alone
improved earthquake resistant
standards.
The Japanese earthquake is believed
to have been the most serious disaster
in Japanese history. It is estimated
that there were over 10,000 people
killed and there remains a high
number unaccounted for. The disaster
continues to have unresolved
problems as the Fukushima nuclear
power plant suffered damaged
reactors, which continue to leak.
The New Zealand earthquake, was of
a magnitude of 6.3 close to
Christchurch. At least 166 people
were killed and a further number
unaccounted for. Rebuilding is taking
place which is expected to cost
approximately Euro 8.5 billion.
The Pakistan (Northern areas)
earthquake, was of a magnitude of
above 7 which killed hundreds of
people and heavy amount of property
and infrastructure damage.
All of the above events caused
extensive damage to infrastructure
that is normally covered under
'CECR' insurance policies.
Insurance Journal July, August, September 2021
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