The Netherlands Minister of Transport, Tineke Netelenbos, in April 2000 officially signed the insurance policy covering the huge construction of the Dutch part of the high speed train network which will link Paris to Amsterdam in three hours. It is one of the first times in history that the state has insured itself for what are considered to be “public works”.

According to the European Union rules, the contract was offered for tender three times before being signed by the parties. Completing all the required details of the tender took a year. The risk was presented to the market by the US broker Marsh, and negotiations took place on the insurance exchanges of Amsterdam and Rotterdam (Assurantie Beurs). Brokers and insurers gather in these two business centres to discuss industrial insurance programmes. Similarly to Lloyd's, the insurers co-insure major risks.

After negotiations, two leading insurers for the Dutch high speed train network emerged: Hannover International Insurance and Royal Nederland, subsidiary of Germany's Allianz and the French AGF. The amount of the risk they have actually taken is not known, but market sources say it is the lion's share. They will earn premiums of about 50 million Dutch guilders (2.3 millions euros).

This huge amount can be explained by the broad coverage and long duration of the policy, which extends for 15 years. It covers the construction of several hundred kilometres of railway between Amsterdam and Antwerp in Belgium.

The arranged contract is an all risks construction policy. Perils covered include those occurring on the construction site, as well as third party claims. One peculiar aspect of the contract concerns the insurance of the state against delays occurring because of damage on the construction site. Nonetheless, Mrs Netelenbos who seems to know about insurance business, says she hopes that this cover will prove unnecessary. She expects the first high speed trains between Antwerp and Rotterdam to run by mid 2005.

The reasons why the Dutch state wished to insure itself have not been clearly explained. But it seems that the possible privatisation of this railway in the near future is one of them. This would please the European authorities in Brussels who want to liberalise the whole transport sector. Moreover, the commercial concerns of this new railway line will be in hands of private companies. In case the Dutch government decides to cede the line itself within the ten years of construction, that is to say before the construction work is finished, the deal will be easier if an insurance policy covers the property. Responsibilities are then clear for all parties.

Insurance exchanges

The insurance exchanges or assurantiebeurzen of Amsterdam and Rotterdam where the contract has been placed play a central role in the Netherlands. The big industrial risks of international conglomerates like Philips, Shell or Unilever are firstly proposed on these assurantiebeurzen. The premium volume which is negotiated represents in total more than 3,5 billion guilders (1,59 billion euros) a year.

These two insurance markets have existed for more than four centuries and, as a result, tradition is a key word in these premises just as at Lloyd's. For example, it is almost compulsory for a specialised underwriter of the following insurer to sign the “slip” when a leader has committed himself. Due to the importance of these organisations, all big international insurance companies are represented here. Lawyers and claims adjusters also have offices in the buildings. An electronic system links each company to the others, and a central administration manages all the steps to be taken on policies, like the payment of the premiums or settlement of the claim.

The coinsurance system which rules within the Amsterdam and Rotterdam insurance exchanges has for many years proved to be an advantage to all the players. Due to the close relationship between the insurers, the rates applied on the risks are generally lower than those of other European markets. Their mutual knowledge of the business on the market permits them to know which loss prevention measures the industrial companies presenting their risks to the market have taken.

In fact, the Dutch have created a marketplace similar to that of the London market appears. The assurantiebeurzen have permitted big industrial risks to remain in the country and to be covered in previous times by national insurers, and nowadays by all those established in the country1. The fact that Marsh has placed a risk which has been subscribed by internationally recognised insurers for a very special insured proves that Dutch insurers have the capacity to manage big risks.

1 The establishment has to be more than a simple representative office.

  • Didier Burg is a freelance journalist based in Amsterdam.

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