Financing is an essential piece of the puzzle for infrastructure project developers. However, for finance providers such as banks, risk on loans is increasing – particularly for projects in emerging countries, which typically face greater volatility or require long-term support. This is where insurance companies come in.
The benefit of insurance on a loan for infrastructure projects is threefold. Firstly, lenders can offer greater credit facilities at a lower cost and with less risk. Secondly, insurers are stable players that can provide the long-term commitment required. And finally, thanks to benefits one and two, insurance means that developers can multiply their impact. In other words, they can increase the number and scale of their infrastructure projects.