Owner Controlled Insurance Program for Kaohsiung Mass Rapid Transit System Project in Taiwan

摘要

In view of the growing size of construction works both in terms of the investment values, magnitude and complexity of work methods, the gravity of risks emanating from construction projects has increased substantially. Purchasing relevant insurances is currently the prevailing mechanism for transferring risk in the construction industry. However, the customary construction contract insurance requirements by which different tiers of contractors, their subcontractors and project designer insure their respective liabilities and exposures have inherent disadvantages for the project owner. It is simply because each insuring party is only concerned about its own premium outlay and the level of claim deductibles rather than the overall interests, quality of insurance protection and project efficiency. The consequences of such a traditional contractual insurance approach will involve problems, such as, mid-term cancellation, incomplete policy, inadequate coverage on the sum insured and policy period, unsound decision to increase the deductibles for the sake of premium reduction, as well as insurmountable claims disputes between insurers regarding whose policy should pay for what. In order to rectify the aforementioned problems, the concept of the Owner Controlled Insurance Program (OCIP) has emerged as an effective solution. However, few researches focus on the current issues of a mega-project with the OCIP concept. This research reviews relevant literature and investigates the impact and potential problems in a mega-project implementing the OCIP. The proposed case study is a mega-project of the Kaohsiung Mass Rapid Transit (KMRT) system in Taiwan. The project cost is more than NT$181 billion and is constructed in a Build, Operate, and Transfer (BOT) model using the OCIP.