Assurance Availability & & Opportunity Term & Renewal Claims & Performance Additional Notes Instrument Procurement Cost In principle casualty The fee structure to date, Casualty insurance In the event of non-compliance While a relatively new insurance is available to any has been that a Credit can be for an by a Credit Developer, a claim assurance product, the use of Credit Developer, but to Developer will pay a indefinite amount against the policy can be initiated causality insurance for date casualty insurance has premium of about time, but most only by the Credit System. The mitigation projects is been used in only a few of the dollar limit of providers have used a insurer will then respond to a expected to grow, as it mitigation projects and is insurance written into the 10-year length to claim by either, working with the provides a low cost option to offered by a handful of policy, though this is date. Credit System to settle the claim, Credit Developers, an insurance companies, subject to vary according or pay a designee of the Credit extended period of coverage, though is expected to to individual applications Once a policy is setup System the claim amount that is and all with minimal increase in the coming or underwriting and in force, it cannot necessary to meet the administrative oversight and years. To obtain a policy, a considerations. The policy be cancelled with the compensatory mitigation maintenance. Credit Developer would would not require a Credit policy period unless requirements as determined by Casualty demonstrate to the insurer Developer to post the Credit System the Credit System. Insurance they have the capacity and additional collateral with was to release the financing to complete their the insurer. insurer from obligations. This process coverage. has tended to be less The main cost of exhaustive than the review establishing casualty for a performance bond. If insurance relates to the accepted, the policy will cost to the Credit include a deductible clause Developer of paying the that requires the Credit initial 2-4% of the policy, Developer to reimburse the which cannot be invested insurer for any costs that the like an escrow account. insurer incurs up to the deductible amount.
Assurance Instrument Availability & Procurement & Opportunity Cost Term & Renewal Claims & Performance Additional Notes Casualty Insurance In principle casualty insurance is available to any Credit Developer, but to date casualty insurance has been used in only a few mitigation projects and is offered by a handful of insurance companies, though is expected to increase in the coming years. To obtain a policy, a Credit Developer would demonstrate to the insurer they have the capacity and financing to complete their obligations. This process has tended to be less exhaustive than the review for a performance bond. If accepted, the policy will include a deductible clause that requires the Credit Developer to reimburse the insurer for any costs that the insurer incurs up to the deductible amount. The fee structure to date, has been that a Credit Developer will pay a premium of about of the dollar limit of insurance written into the policy, though this is subject to vary according to individual applications or underwriting considerations. The policy would not require a Credit Developer to post additional collateral with the insurer. The main cost of establishing casualty insurance relates to the cost to the Credit Developer of paying the initial 2-4% of the policy, which cannot be invested like an escrow account. Casualty insurance can be for an indefinite amount time, but most providers have used a 10-year length to date. Once a policy is setup and in force, it cannot be cancelled with the policy period unless the Credit System was to release the insurer from coverage. In the event of non-compliance by a Credit Developer, a claim against the policy can be initiated only by the Credit System. The insurer will then respond to a claim by either, working with the Credit System to settle the claim, or pay a designee of the Credit System the claim amount that is necessary to meet the compensatory mitigation requirements as determined by the Credit System. While a relatively new assurance product, the use of causality insurance for mitigation projects is expected to grow, as it provides a low cost option to Credit Developers, an extended period of coverage, and all with minimal administrative oversight and maintenance.
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