When should insurance products be used in a project finance deal?
a) Due to the contractual structure of project finance, there's no need for insurance because risks are allocated among various parties by means of legally binding contracts.
b) Insurance should be used when the SPV's cost of risk mitigation using insurance policies is less than the premium for risk expressed in interbank interest rates requested by banks if no coverage exists.
c) Insurance should be used when the SPV's cost of risk mitigation using insurance policies is more than the premium for risk expressed in interbank interest rates requested by banks if no coverage exists.