Panama Canal expansion covered by global insurers and reinsurersReprints
Major global players in the insurance industry are providing coverage for the pivotal Panama Canal expansion project.
Munich Reinsurance Co., the primary insurer, and Zurich Insurance Group Ltd. are leading the Autoridad del Canal de Panama's (the Panama Canal Authority) insurance program. Willis Group Holdings P.L.C. is the broker. None of the parties involved in the coverage would disclose limits or other terms of the policies.
The insurers conduct regular site visits to keep up to date with the project's progress, said Joachim Pawellek, a senior engineering underwriter at Munich Re in London and risk engineer for the project.
Coverage for the mammoth eight-year project that could end up costing more than $6 billion and is slated to be finished next year includes:
• A contractor all-risk policy for physical damage to the canal from an unforeseen event, such as a natural catastrophe or workmanship errors, Mr. Pawellek said. The contractor all-risk policy will remain in place for a limited time after the project is completed to cover defects or maintenance issues.
As part of the overall construction, building the canal gates in Italy and transporting them to Panama has been a major feat itself. The gates are being shipped, in one piece, to the canal. Each gate measures 190 feet long, 32.8 feet wide, 108 feet high and weighs 3,300 tons, he said. The gate building and transportation is covered by the project's contractor and marine policies.
The canal's lock chambers will measure 180 feet wide by 1,401 feet long — the equivalent of more than four football fields — and 59 feet deep.
The contractor policy also covers construction materials, whether fixed or unfixed, and will cover claims related to injuries to third parties, among other things.
• An excess policy covers third-party liabilities such as injuries to workers on the canal project. It is not underwritten by Munich Re, and Mr. Pawellek declined to disclose the policy underwriter.
• A marine policy covers damage to goods at sea in transit to the canal, among other things.
• A construction surety bond of at least $400 million was provided by Zurich for the project, which includes building a third set of locks to expand the canal's capacity.