OREANDA-NEWS. January 15, 2009. ROSNO’s Ural Directorate has concluded a civil liability insurance contract with CJSC First Milk Company providing coverage against the risk of its default on obligations assumed under the public contract entered into with the Yekaterinburg Regional Healthcare Department. The contractual insurance amount is 25,297,015 roubles, reported the press-centre of ROSNO.

According to the public contract concluded between the regional Healthcare Department and First Milk Company, the latter undertakes to supply children’s dairy products to the medical institutions of 49 cities and towns of Yekaterinburg Region in 2009.

The insurance contract covers property interests of First Milk Company related to the risk of civil liability for the breach of obligations under the public contract. The contractual insurance beneficiary is the Yekaterinburg Regional Healthcare Department. The insurance contract will be effective until complete performance of obligations under the underlying public contract.

According to Ms. Oxana Fedorova, specialist of the Corporate Sales Department in the Ural Directorate, "the interest towards insurance coverage of the risk of default on obligations under public contracts has seen a sharp rise recently. The participants of municipal tenders are obliged to choose the type of collateral for their liability to the customer from between the following options: bank guarantee, insurance policy, or pledge of monies. In the times of crisis, obtaining a bank guarantee is extremely difficult; furthermore, many companies are today unable to withdraw means for pledge from their business turnover, therefore, the best alternative is the insurance coverage of civil liability under the public contract, whereby the cost of policy is many times lower than the size of insurance compensation to be paid in case of an insurance event", she commented.