CLS Risk Solutions, a UK-based MGA, has introduced public procurement insurance for the broker market.
According to CLS Risk, the new insurance plan safeguards developers against losses arising from the cancellations of a public contract.
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The launch of the new insurance follows a recent verdict in the in the case of Faraday Development versus West Berkshire Council.
The court ruled that the public contract awarded to Faraday Development by the local authority to the developer was null and void.
CLS said that it witnessed a ten-fold increase in enquiries for public procurement insurance after the court’s ruling.
CLS Risk Solutions lead underwriter for public law risks Chris Gwynn said: “The Faraday case has set a precedent for the award of declarations of ineffectiveness in England and Wales and created much uncertainty for all those parties involved in awards and carrying out of public contracts.
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By GlobalData“This is prompting a cautious approach from contractors, funders, and their advisers, which is stalling contractual negotiation and jeopardising projects.
“All of this is resulting in a much greater demand for public procurement indemnity insurance and presents a new market opportunity for brokers.
“Public procurement indemnity insurance is typically arranged via brokers or lawyers, who now have a significant opportunity to support developers, and provide the necessary comfort for stakeholders to allow a development to proceed.”
