CLS Risk Solutions launches public procurement insurance in light of recent court ruling

New policy protects developers against challenges to the awarding of a public contract

CLS Risk Solutions launches public procurement insurance in light of recent court ruling

Construction & Engineering

By Duffie Osental

CLS Risk Solutions has launched public procurement insurance for the broker market, having experienced a ten-fold rise in enquiries after a recent Court of Appeal ruling.  

In Faraday Development Ltd v West Berkshire Council, the court declared that the public contract awarded by the local authority to the developer was ineffective. CLS said that the ruling has emphasised the risk of public contract award cancellations, warning that successful challenges to public contract awards are now more likely – and should be insured.

In response, CLS has launched Its public procurement indemnity insurance to protect developers against the consequences and losses arising from a successful challenge to the award of a public contract. 

“The Faraday case has set a precedent for the award of declarations of ineffectiveness in England and Wales and created much uncertainty for all those parties involved in awards and carrying out of public contracts,” said Chris Gwynn, lead underwriter for public law risks at CLS Risk Solutions. “This is prompting a cautious approach from contractors, funders, and their advisers, which is stalling contractual negotiation and jeopardising projects.

“All of this is resulting in a much greater demand for public procurement indemnity insurance and presents a new market opportunity for brokers. CLS is a leader in the market for creating bespoke solutions for legal risks affecting property. Public procurement indemnity insurance is typically arranged via brokers or lawyers, who now have a significant opportunity to support developers, and provide the necessary comfort for stakeholders to allow a development to proceed.”

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