Liberty Mutual
INSURANCE
Liberty Mutual
COMMERCIAL. INSURANCE. SOLUTIONS
LIBERTY MUTUAL GROUP
IN TIMES OF CRISIS, WE’RE HERE FOR YOU
COMPREHENSIVE NON PAYMENT INSURANCE
Reducing financial losses due to outright non payment on delivered contracts
WHAT IS NON PAYMENT INSURANCE?
It covers banks and other financial institutions when borrowers fail to pay back loans. While most lenders usually enter into a syndicate with other financial institutions, an insurance cover can allow the lender to take on the entire loan value without the involvement of other banks. The insurance acts as a stop-loss arrangement, therefore enabling lenders to leverage the banks’ credit limit on the obligor/country/loan type and assist the bank in obtaining capital relief.
How does it work?
WHERE THE OBLIGOR IS THE PROJECT OWNER ITSELF
WHERE THE OBLIGOR IS THE SUPPLIER / CONTRACTOR
PRODUCT COVERAGE
Default of an arbitration award by a public sector counterparty in its capacity as a contractual partner of the insured; or, in the case of a private sector counterparty, action by the host country government that causes the counterparty to default on an arbitration award.
NON PAYMENT OF ARBITRAL AWARD
Covers loss occurred due to breach of contractual terms due to inability to pay as agreed upon. This could be by a private party or a public obligor. Inability to export due to operating license cancellation at the direction of the host currency, would also be covered under this.
CONTRACT FRUSTRATION / BREACH OF CONTRACT
Contracts which have the backing of the sovereign are usually co Failure of a sovereign entity to honor its payment obligations under a guarantee agreement issued in support of a project. These payments could be in the form of direct loans, loan guarantees, letters of credit issued by state owned banks etc.
NON-HONORING OF SOVEREIGN GUARANTEE