Mon 13 Aug 2012
The focus on big builds in London in recent years has been above ground. Now, though, it’s time for another mega-project to take centre stage in the UK, and this one digs down.
Called Crossrail, the £15.9bn railway linking Berkshire, Essex and Kent with central London, is currently Europe’s largest feat of engineering, and has made history for global insurance.
Stretching a total length of 118.5km, Crossrail includes 42km of tunnels that must be woven under some of the busiest parts of the city, as well as eight new stations below ground. Although it’s not due to open until 2018, the project is about to enter its most intense phase of construction.
Delivering Crossrail demands tremendous effort not only on the part of the engineers, but also from insurers. In 2009, the line made history with the first nine-year construction project insurance policy ever to be placed in the global market.
“A policy without a break clause was a key requirement”, explains Mike Hawkes, Managing Director of appointed broker Gallagher Heath Engineering Services. “Crossrail didn’t want to have to go through a new process every three years. It has a fixed budget and needs certainty of premium costs.”
In order to provide a single policy for the duration of the project, the insurers first had to grasp an extraordinary amount of technical and logistical detail - not least understanding how the 250m-long station platforms will fit into London’s already congested underground infrastructure. “As you’d expect for a project of this nature, there are significantly high liabilities,” says Hawkes.
Around a third of the project was underwritten through Lloyd’s, with the market accounting for a significant proportion of both the primary and excess programmes. “Capacity and a willingness to be flexible is very important on a project like this,” says Hawkes. “And it’s this for which Lloyd’s in particular has always been recognised.”
The scale of Crossrail itself was not the only challenge. Because it is a public-sector project, everything, including insurance, had to be procured via the multi-stage, paperwork-intensive Official Journal of the European Union (OJEU) process.
“The insurance market is used to face-to-face dialogue so they had to adapt to a new approach, but everyone realised that this is an iconic, unique project and those who wanted to participate went out of their way to make it work.”