In order to guarantee the delivery of ER’s to investors, the Carbon Fund Manager (CFM) itself invests in a large number of projects. In the event of a shortfall in delivery, the CFM is liable for replacement ER’s to investors.
A policy is issued to the CFM which insures it against its projects producing less than can reasonably be expected, in the aggregate, annually. The policy covers the CFM’s entire portfolio of projects on an excess-of-loss basis up to an agreed aggregate limit and rather than assess each project individually, we underwrite the CFM’s risk management procedures and controls, as well as its track record. As part of our “audit” process, however, we do assess in detail the major projects, which also has the benefit of giving the CFM confidence regarding the coverage position in respect of its major project exposures.
The policies can cover the full range of insurable risks, although certain risks become insurable depending on the level of ownership of the project that the CFM holds.
Premium is paid by the CFM and policies are for twelve months, although commitments to renew or multi-year policies can be negotiated, depending on the expected growth of the CFM’s portfolio. Premium is paid and fully earned at inception for the period of cover.
In order to claim, the CFM must provide proof of ownership of the ER’s and of non-delivery and payment is made within 120 days of the aggregate deductible being exceeded.
We offer the following options:
1. Fixed value (agreed at inception)
2. Floating (market value at the date of scheduled delivery)
3. Replacement ER’s (or equivalent compliance instrument)
Pre-registration risks can be covered for the amount paid in advance to the PC for the ERs