INSURANCE PREMIUM RISK SHARING SCHEDULE
1.1 For the purposes of this Schedule, the following words and expressions shall bear the following meanings:
Actual Relevant Insurance Cost means the aggregate of the [annual] insurance premiums reasonably incurred by the Contractor to maintain the Relevant Insurance during the Review Period but excluding insurance premium tax and all broker’s fees and commissions;
Base Relevant Insurance Cost means, for the purposes of calculating the Insurance Cost Differential, the amount set out in the Financial Model  as the aggregate of the [annual] insurance costs (comprising both insurance premiums and any insurance related contingency amounts) which were (at Financial Close) projected to be incurred to maintain the Relevant Insurance during the Review Period expressed in prices of the year in which Financial Close took place, escalated by actual RPI since Financial Close up to the dates on which the Relevant Insurance was placed during the Review Period but excluding insurance premium tax and all brokers’ fees and commissions[, as decreased by an amount equal to any decrease in the Unitary Charge which is made pursuant to clause [ ] of the Agreement];
Business Day shall bear the meaning ascribed to it in the Agreement;
Business Interruption Cover shall bear the meaning ascribed to it in the Required Insurance schedule in the Agreement;
Construction Period Insurance means the Required Insurance in respect of the period from the date of this Agreement to the Service Commencement Date;
Contract Period shall bear the meaning ascribed to it in the Agreement;
Contractor Related Party shall bear the meaning ascribed to it in the Agreement;
Contractor’s Statement shall bear the meaning ascribed to it in paragraph 2.3;
Distributions shall bear the meaning ascribed to it in the Agreement;
Exceptional Cost means, for a Review Period, the extent to which there is an Insurance Cost Increase which exceeds in amount 30% of the Base Relevant Insurance Cost for that Review Period;
Exceptional Saving means, for a Review Period, the extent to which there is an Insurance Cost Decrease which exceeds in amount 30% of the Base Relevant Insurance Cost for that Review Period;
Financial Close shall bear the meaning ascribed to it in the Agreement;
Financial Model shall bear the meaning ascribed to it in the Agreement;
First Review Date means the first business day following the date of the first renewal of the Relevant Insurance which takes place at least  days after the Relevant Insurance Inception Date;
Insurance Cost Differential shall, subject to the Insurance Review Procedure, be determined as follows:-
Insurance Cost Differential = ARIC - BRIC - PIC
ARIC is the Actual Relevant Insurance Cost
BRIC is the Base Relevant Insurance Cost
PIC is any Project Insurance Change
Insurance Cost Decrease means the Insurance Cost Differential if the value thereof is less than zero, multiplied by minus one;
Insurance Cost Increase means the Insurance Cost Differential if the value thereof is greater than zero;
Insurance Cost Index means any index introduced by the Government or the Office of National Statistics after the date of this Agreement and which is anticipated to be published annually to provide an independent and objective measure of changes in prevailing market insurance costs;
Insurance Review Procedure means the procedure set out in paragraph 2;
Portfolio Cost Saving means any insurance cost saving which arises and which is attributable to the Contractor changing the placement of the Required Insurances from being on a stand-alone project-specific basis assumed at Financial Close, to being on the basis of a policy (or policies) also covering risks on other projects or other matters which are outside the scope of the Project so as to benefit from portfolio savings. A Portfolio Cost Saving is defined to be a positive sum and cannot be less than zero;
Project Insurance Change means any increase or decrease in the Actual Relevant Insurance Cost relative to the Base Relevant Insurance Cost, arising from:
(a) the claims history of the Contractor or any Contractor Related Party;
(b) the effect of any changes in deductibles;
(c) any other variation between the Base Relevant Insurance Cost and the Actual Relevant Insurance Cost which does not arise from changes in circumstances generally prevailing in the Relevant Insurance Market, except for Portfolio Cost Savings.
Relevant Insurance means the Required Insurance other than:
(a) Construction Period Insurance;
(b) Business Interruption Cover except to the extent that it relates to fixed and unavoidable costs, but not including Distributions; and
(c) any professional indemnity cover;
Relevant Insurance Inception Date means the date on which the Relevant Insurance is first providing active insurance cover to the Contractor, being a date no earlier than the Service Commencement Date;
Relevant Insurance Market means the insurance market where insurance for the majority of projects under the
Required Insurance shall bear the meaning ascribed to it in the Agreement;
Review Date means the First Review Date and, thereafter, each date falling on the second anniversary of the previous Review Date, except where such date lies beyond the date of termination of the Agreement, in which case the Review Date shall be the last renewal date of the Relevant Insurance prior to the date of termination of the Agreement;
Review Period means the period from the Relevant Insurance Inception Date to the First Review Date and each subsequent period commencing on the previous Review Date and ending on the Review Date;
RPI means [ ]; and
Service Commencement Date shall bear the meaning ascribed to it in the Agreement.
2 Insurance Review Procedure
2.1 This procedure shall be used to determine whether the Authority shall bear any increase or benefit from any decrease in Relevant Insurance costs.
2.2 On a date not sooner than twenty (20) Business Days prior to each Review Date the Contractor shall commence the following procedure.
2.3 The Contractor shall, with the assistance of its insurance broker, and no later than the date which is ten (10) Business Days after the Review Date, deliver to the Authority at least two copies of an insurance cost report (prepared at the Contractor’s expense) which should, as a minimum, contain the following
2.3.1 The Actual Relevant Insurance Cost for each date within the Review Period on which the Relevant Insurance was placed or renewed;
2.3.2 The Base Relevant Insurance Cost for each date within the Review Period on which the Relevant Insurance was placed or renewed;
2.3.3 An assessment and quantification of each Project Insurance Change;
2.3.4 Full details of any Portfolio Cost Saving;
2.3.5 Any other reasons that the Contractor believes may have caused a change (by way of increase or decrease) in the Actual Relevant Insurance Cost;
2.3.6 The opinion of the Contractor’s insurance broker as to the reasons why the Actual Relevant Insurance Cost has varied from the Base Relevant Insurance Cost, specifying the impact of each of the factors and quantifying the amount attributable to each factor specified above; and
2.3.7 The calculation of the Insurance Cost Differential and any Exceptional Cost or Exceptional Saving arising from this calculation;
2.3.8 Evidence satisfactory to the Authority (acting reasonably) of any changes to circumstances generally prevailing in the Relevant Insurance Market that are claimed to account for the Insurance Cost Differential;
(together the Contractor’s Statement).
2.4 Following receipt of the Contractor’s Statement, the Authority shall notify the Contractor in writing within fifteen (15) Business Days whether or not it accepts the Contractor’s Statement including full details of any disagreement. If the Authority does not provide such notification and/or details of any disagreement to the Contractor within fifteen (15) Business Days, the Authority shall be deemed to have accepted the Contractor’s Statement. If the Authority disagrees with any item in the Contractor’s Statement, the Parties shall use their respective reasonable endeavours acting in good faith to agree the contents of the Contractor’s Statement. If the Parties fail to agree the contents of the Contractor’s Statement within thirty five (35) Business Days from the date it was delivered to the Authority, the matter shall be resolved pursuant to Clause 67 (Dispute Resolution).
2.5 The Authority may make the Contractor’s Statement available to HM Treasury or any of its or HM Treasury’s agents or advisers for insurance cost verification, benchmarking or similar purpose.
3 Sharing of Exceptional Cost and Exceptional Saving
3.1 If, following the completion of the Insurance Review Procedure, it is agreed or determined that there is an Exceptional Cost, the Authority shall within thirty (30) days of completion of the Insurance Review Procedure make a one-off lump-sum payment to the Contractor equal to 85% of the Exceptional Cost.
3.2 If, following the completion of the Insurance Review Procedure, it is agreed or determined that there is an Exceptional Saving, the Contractor shall within thirty (30) days of completion of the Insurance Review Procedure make a one-off lump-sum payment to the Authority equal to 85% of the Exceptional Saving.
3.3 Following the completion of the Insurance Review Procedure, if it is agreed or determined that there is neither an Exceptional Cost nor an Exceptional Saving, any Insurance Cost Differential shall be borne by or benefit the Contractor.
4 Insurance Cost Index
If at any time an Insurance Cost Index is published and intended for use in PFI contracts of a similar nature to this Agreement, the Parties shall meet with a view to agreeing (a) its application to the Project, taking into account any relevant guidance issued by HM Treasury and (b) how a Portfolio Cost Saving may be accounted for when the index is in use.
 This will depend on the frequency of payment of insurance premiums.
 Two issues are important in this regard: first, that the projected cost of the Relevant Insurance assumed in the Financial Model (at Financial Close) was set at a median level such that the probabilities of the outturn costs being higher or lower in the future (after adjusting for RPI inflation) were the same – this is to ensure consistency with the symmetrical sharing of Insurance Cost Differentials; and second, that this median level was held constant in real terms year-on-year in the Financial Model and not profiled, again to ensure that the symmetrical cost-sharing bands work as intended.
 Reference to clause(s) which allow for a downward adjustment to the unitary charge in the event that the scope of insurance effected is less than the Required Insurance set out in the insurance schedule on account of unavailability of insurance for a risk, term or condition.
 Agreement refers to the Project Agreement to which this is a schedule.
 This has the effect of setting a two–yearly cycle of Review Dates, although the first Review Period is necessarily a year and day in length (i.e. covering the initial inception of the Required Insurances and their first annual renewal).
 This is assumed to be covered under fixed-price arrangements and so not subject to variation.
 In addition to senior debt service costs, the Contractor may incur other unavoidable costs if the start of the operational period is delayed or in the event of an interruption to the operation of the project, e.g. any fixed cost for the provision of utilities. These unavoidable costs will vary from project to project.
 If the Required Insurance contains any other ancillary (i.e. non-standard) insurances, these must also be referred to here.