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On the Road to Success: Colombia’s 4G Projects

On the Road to Success: Colombia’s 4G Projects

The development of road infrastructure projects in emerging economies is one of the insurance market’s key areas of interest. Recently, Colombia has been in the spotlight as it continues to develop over 10 of the 30 key projects involved in expanding Colombia’s highway network by over 3,500km. Taking into consideration Colombia’s extensive size of 1,138,910 km square, circa 5 times that of the United Kingdom, there is a substantial amount of work and funds that will be required for this major government initiative called the 4G Projects (Fourth Generation of Road Concessions of Colombia). At present it is estimated to require an investment of over US$70 billion. 

The work on these 4G Projects has already commenced and there have also been sizeable losses and casualties over recent years. This has provided the local insurance market with valuable insight and lessons on how to manage these risks moving forwards. In a market as interconnected as the Colombian insurance market, it is clear to all that underwriters and claims handlers need to be given adequate training in order to fully understand the extent and scope of work of the contractors and also that of the government. 

There is unanimity that in addition to technical knowledge, it is critical to have a clear understanding of the objectives of each of these major infrastructure projects, understanding how their bidding and adjudication process works and being informed as to how the government has intervened in the project’s insurance through specially underwritten policies. 

As Colombia continues to take a leading role in the Latin American insurance and reinsurance markets, many global reinsurers have decided to open their own offices in Colombia. This has enabled them to have a deeper insight on the local market, foster stronger relationships with local insurers and develop a thorough understanding of their needs in terms of cover and local policy wordings, such as those that apply to the 4G Projects. 

In our experience, when losses arise the key components for effective handling of these is to have comprehensive information on the preliminary inspections carried out by the contractor, insight from the insurer as to the project, policy and relevant losses that have occurred, as well as input from the broker involved at the time the policy was granted. A fluid and continuous flow of communication between claims and underwriting are essential in order to have full clarity and unanimity in the interpretation of the scope of the conditions and clauses granted. The construction of risk matrices and the correct assignment of responsibilities in the construction process allow us to effectively adjust all losses, having full agreement between all parties involved. 

In order to clearly understand the cause of any possible delays and evaluate their actual impact under ALOP or DSU covers, it is imperative to have a clear insight as to exactly at what stage of progress the project works are. 

In order to offer the insurer and/or reinsurer a comprehensive and technical assessment, the loss adjuster must have thorough experience in the relevant risks involved, as well as the ability to interpret project schedules, delays and critical paths and to effectively quantify the extent of damage covered under the policy. 

Our recently established ADVANTA office in Colombia, has been developing and expanding since its inception. Our team has widespread experience in major infrastructure, construction, engineering and liability and has capabilities to offer technical insight and a high level of service throughout Colombia. 

Our group can also leverage its technical resources offering a full spectrum of services for major and complex losses, as we also have separate business units offering Forensic Accounting (DSU/ALOP, BI) and Project Monitoring services. The latter involves the monitoring of actual work progress vs the scheduled programme, the identification and measurement of the impact of any losses that may trigger a DSU claim, assessment risk exposures and monitoring of third parties’ liabilities. 

The recent presidential elections in the country have provided investors, businesses, insurers and the government with more confidence as to the political and economic stability of this country. As the 4G project works continue in this unprecedented period of infrastructure development in Colombia, ADVANTA offers its technical expertise and experience in construction, liability, engineering and financial lines, local market insights and high levels of service to the insurance market. 

Germán Pedraza can be contacted at

Carlos Garcés can be contacted at