Pecha Kucha - Four short presentations from industry leaders: Ian Robb Liberty Specialty Markets (The Engineer) Hugh Kennaway MatthewsDaniel ...
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Pecha Kucha – Four short presentations from industry leaders: Ian Robb Liberty Specialty Markets (The Engineer) Hugh Kennaway MatthewsDaniel (The Adjuster) John Matthews Trust Re (The Insurer) David Leich MESCAT Engie (The Buyer)
MENA Claims
Experience
Loss Trends
Ian Robb, Head of Risk Engineering
25th April 2018, Onshore Energy Conference, Dubai
Introduction
• Captured and analysed 770 Oil & Gas industry global onshore losses from 2000 to
2018
• Natural Catastrophe losses (~150 in total) captured in database but excluded from
this analysis
• This analysis focuses on the Middle East Oil & Gas onshore sector and Cause of
Loss
• Power loss database maintained since 2008 and I will summarise key issues
3
Global Oil & Gas PD / BI Losses Breakdown by Occupancy
Other
14%
Gas Plants
7% Refining sector is by far the
Refining
45% largest and most frequent
Plastics source of losses in the global
8% onshore oil & gas industry
Tar Sands
12%
Ethylene
% Breakdown based on Total
14% Indexed Loss (USD million)
4
Primary Contributing Factors
Rest of World Middle East
Other
11% Other
18%
Operations Operations
32% 29%
Mechanical Mechanical Integrity
Integrity Design and
29%
47% Construction
19%
Design and
Construction
8%
Fire and Safety
2% Fire and Safety
5%
Of which 73% is due Of which only 33% is due to
to piping failure piping failure (generally newer
Plant & Equipment in the ME) 5
Losses by Age of Plant - Global
• Age of Plant sample size 230
120 9,000
8,000
Losses Due to Mechanical
100
Integrity Increases with Age
Total Indexed Loss (USD million)
7,000
80 6,000
Number of Losses
5,000
60
4,000
40 3,000
2,000
20
1,000
0 -
0-10 10-20 20-30 30+
Age in Years
6
Losses by Age of Plant – Middle East
• Age of Plant sample size 30
20 3,000
18
2,500
16
Total Indexed Loss (USD million)
14
2,000
Number of Losses
12
10 1,500
8
1,000
6
4
500
2
0 -
0-10 10-20 20-30 30+
Age in Years
7
Some Thoughts on Middle East Oil & Gas Loss Activity • In general, Middle East process plant and equipment is relatively young. So far - hasn’t suffered same frequency of Mechanical Integrity failures as the Rest of the World - but need to remain vigilant and ensure high level of Inspection competence • Most losses caused by Operations failure and teething problems from Design & Construction • Competence of Operations personnel critical – qualifications / experience, including Production Engineering day staff. Shift Teams can lack formal technical qualifications in Process Plant Operations – lack ability to trouble shoot during start-up, shutdown and process upsets. Adequacy of systems of work - minimum standards for work permit, process isolation systems……. • Speed of Localisation and transient nature of the workforce is a concern in some countries - needs careful and considered integration planning • The Region doesn’t have the support of a strong Health & Safety Regulator (‘Safety Case’ Regime), say compared to Europe - though some companies benefit from Joint Venture partner corporate programmes. 8
Some Thoughts on Middle East Power Loss Activity • Globally and in the Middle East, Gas Turbine losses most dominant category, followed by electrical generators • Large Gas Turbine OEMs continue to develop larger and more efficient technology machines, changing risk landscape - keeping up with developments is a major challenge for insurers • Power sector has no apparent Age of Plant of loss trend and losses can happen anytime, if creep / fatigue ‘issues’ are not correctly monitored or remaining life isn’t assessed properly • Most common cause of loss due to design / manufacturing defects and failure of OEMs / Owner maintenance teams to stay ahead of developing issues • Renewables (primarily Solar in Middle East) – concerns at pace of reduction in construction costs and new entrants in respect of Owners, EPCs and OEMs in the supply chain, who may not have required experience or competence. 9
2018 Onshore Energy Conference Dubai
Next presentation…
MENA CLAIMS EXPERIENCE The Adjusters Perspective Hugh Kennaway OEC - April 25, 2018
PLAN § Common Causes § Claims Issues § Trends
COMMON CAUSES § Corrosion § Incomplete turnarounds § Operator error § Software logic § Poor supervision and administration § Manufacturing defects § Refurbishing and material defects § OEM instructions not implemented eg TILS
ALL RISKS COVER
§ Layout of policy can vary but typically for Section 1 PD:
§ Operative Clause – “If during the period of insurance the property insured or any part
thereof shall be lost destroyed or damaged by unforeseen and sudden physical
loss or damage other than those specified under the Exclusions the Company will
pay to the Insured the value of the property at the time of the happening….
§ Exclusions
§ Excepted Causes specific to the PD or MB section
§ Special Conditions applicable to the PD or MB sections
§ General Conditions applicable to all sections
§ General Excepted Causes applicable to all sections
Insured: Loss or Damage
Insurer: ExclusionROOT CAUSE ANALYSIS § Why and what does the policy do about it? § Exclusions, warranties, conditions § Close Proximity § Series losses § Likely subrogation § Size § Policy § Potential Solutions
NON VITIATION CLAUSE/ MULTIPLE INSUREDS CLAUSE § What is it? § What does it mean? § What is the effect? § What is the practicality?
§ MULTIPLE INSUREDS CLAUSE § “It is further understood and agreed that Insurers shall be entitled to avoid liability to or, (as be appropriate) claim Damages, from any of the insured parties in circumstances of fraud, material misrepresentation, material non-disclosure or breach of any warranty or condition of this Policy each referred to in this Memorandum as a Vitiating Act. § It is however agreed that (save as described in this Multiple Insureds’ Clause) a Vitiating Act committed by one insured party shall not prejudice the right to indemnity of any other insured party, who has an insurable interest and who has not committed a Vitiating Act. § Insurers hereby agree to waive all rights of subrogation which they may have or acquire against any insured party, except where the rights of subrogation or recourse are required in consequence of or otherwise following a Vitiating Act, in which circumstances Insurers may enforce such rights, not withstanding the continuing or former status of the vitiating party as insured.”
TRENDS § 3 D Imaging § Drones § Outside Service Providers for power claims § Changes in policy wordings: BI, RCA….
Thinking. Generation.
2018 Onshore Energy Conference Dubai
Next presentation…
Middle East Claims Handling
“ The Route to World Class? ”
Presentation to the Onshore Energy
Conference, Dubai by John
Matthews, Head of Claims
25th April 2018
© Copyright TRUST RE 2018. All rights reserved. No part of this presentation in all its property may be used or reproduced in any form or by any means without written permission by Trust Re. 24Are we World Class?
• First of all, what is World Class?
It could be that we can stand shoulder-to-shoulder with what our
Customers consider to be the best of our international equivalents –
only our Customers can decide.
Well, how do we think we measure up?
© Copyright TRUST RE 2018. All rights reserved. No part of this presentation in all its property may be used or reproduced in any form or by any means without written permission by Trust Re. 25What are (some of) the critical elements?
• Clarity
• Consistency
• Communication
• Collaboration
© Copyright TRUST RE 2018. All rights reserved. No part of this presentation in all its property may be used or reproduced in any form or by any means without written permission by Trust Re. 26Clarity
Clarity Traps
Absence of an agreed and understood Claims Handling Protocol
Response: Ensure every Insured is included and briefed on the communication
channels and expected path a claim type might take.
Poor or ‘patched up’ Policy Wordings
Response: Review and ‘fix’ Wordings to sense-check, sanitise and simplify. Broker and/or Insurer
and/or Reinsurer provide a clear and intelligible explanation of the coverage available
PRE-LOSS – (in person?).
Inadequate technical understanding
Response: Technical training, knowledge sharing.
Default defensive attitude to claims
Response: Assessment of your business objectives and level of Customer
centricity.
© Copyright TRUST RE 2018. All rights reserved. No part of this presentation in all its property may be used or reproduced in any form or by any means without written permission by Trust Re. 27Consistency
Could we achieve greater consistency of service by:
• Standardising Claims Handling Protocols?
• Considering standard Terms of Engagement for loss adjusters,
similar to the Lillehammer Terms of Engagement?
• Centralised settlement processing resources? Similar to ECF?
• Regional Market Groups, focusing on Claims and/or specific
lines of business?
© Copyright TRUST RE 2018. All rights reserved. No part of this presentation in all its property may be used or reproduced in any form or by any means without written permission by Trust Re. 28Communication
© Copyright TRUST RE 2018. All rights reserved. No part of this presentation in all its property may be used or reproduced in any form or by any means without written permission by Trust Re. 29Collaboration
Collaboration is, or at least should be, a multi-directional concept in
(re)insurance. To maximise a collaborative approach we need to continue
to earn and keep each other’s trust, respect and understanding and agree
on what a successful claim outcome looks like.
© Copyright TRUST RE 2018. All rights reserved. No part of this presentation in all its property may be used or reproduced in any form or by any means without written permission by Trust Re. 30Where are we on the Route to World Class?
• Clarity
• Consistency
• Communication
• Collaboration
• Conclusion
• Thank You
© Copyright TRUST RE 2018. All rights reserved. No part of this presentation in all its property may be used or reproduced in any form or by any means without written permission by Trust Re. 31© Copyright TRUST RE 2018. All rights reserved. No part of this presentation in all its property may be used or reproduced in any form or by any means without written permission by Trust Re.
2018 Onshore Energy Conference Dubai
Next presentation…
What the customers want?
David Leich
COO , Engie – MESCAT
Pecha KuchaContents – Pecha Kucha style l Who is Engie? l Developments in Middle East power market l Renewable activity - CSP, wind, hydro, biomass, hybrids l Situation with the OEMs l Quality and competence in power O&M l What can go wrong? l Claims – my view l Issues for insurance market l Conclusions 25 April 2018 2018 Onshore Energy Forum - Dubai 36
Engie – MESCAT Middle East, South, Cental Asia + Turkey lActive in 9 countries l32GW of power l1200 MIGD of desalinated potable water l+1000MW of renewables wind and PV in India l350,000 gas distribution customers in Turkey l50% of Tabreed district cooling business GCC – 1MRT – (refrigerant tons) lActive in infrastructure management and customer solutions 25 April 2018 2018 Onshore Energy Forum - Dubai 37
Middle East Power Market
–Arab Mezze
l Add one large UAE nuclear power plant,
with an uncertain start up date
l Add renewables, mostly PV, some wind,
some CSP
l Add growing demand for water and power
l Decouple water from power – develop large
reverse osmosis plant
l Run thermal plants in a cyclical mode
l Add aging plant
25 April 2018 2018 Onshore Energy Forum - Dubai 38More Arabic Mezze lAdd geopolitical tensions lAdd variable oil price lAdd merchant market lAdd grid instability lEnjoy– a lot on the table! 25 April 2018 2018 Onshore Energy Forum - Dubai 39
Solar
l PV coming fast in GCC – UAE, KSA
l CSP coming in Dubai
l PV developments in Bahrain, Oman,
Qatar ….
l Mega project in KSA?
l India – reverse auction
l Turkey – established
l Highly competitive market
25 April 2018 2018 Onshore Energy Forum - Dubai 40Wind
lFirst project bid in KSA 17 April
lIndia – reverse auctions
lTurkey & Egypt well established
lPossibly offshore Turkey and
India
25 April 2018 2018 Onshore Energy Forum - Dubai 41Storage – water, hydrogen and batteries
lPossible water pump storage UAE?
lUse of PV to drive electrolysis to
produce hydrogen
lHydrogen added to gas grid or fuel
cells
lBig batteries coming
lGrid support
25 April 2018 2018 Onshore Energy Forum - Dubai 42Desalination technologies l Currently most water production is thermal desalination l Low grade steam to evaporate sea water l2 main types – MED and MSF l SWRO – seawater reverse osmosis is a non thermal process but very power hungry l ROuses multiple semi-permeable membranes 25 April 2018 2018 Onshore Energy Forum - Dubai 43
What is happening to the OEMs? l Tough world for large gas turbine producers eg GE l Alternativenon-OEM suppliers producing competitive upgrades, parts and modifications l Difficult to make money in PV l Wind turbines, mixture of European, USA and Chinese suppliers l Batteries– Chinese and Korean dominating the market 25 April 2018 2018 Onshore Energy Forum - Dubai 44
Quality and Operator Competence
lHigh occurrence of quality related issues in
exercise of maintenance works
lBARS – Behavioural Attitude
Recommendation Standards (joint Engie –
RCA – claims)
lOperator competence assessment
lLocalisation requirements eg Emiratisation,
Saudisation
25 April 2018 2018 Onshore Energy Forum - Dubai 45Digital initiatives
lIntroduction of AI in plant process
control and fault finding
lBig data analytics
l3D printing of spare parts
25 April 2018 2018 Onshore Energy Forum - Dubai 46Battery fire
What can go wrong?
l Mechanical damage, fatigue,
corrosion is the largest cause of
claims in power industry
l Fire always a risk with hydro-carbon
processes RO Plant
l New technologies bring new risks
l What is the biggest risk on a $1B
SWRO (Reverse Osmosis) plant?
25 April 2018 2018 Onshore Energy Forum - Dubai 47Typical GT compressor crash
“Corn Cobbed”
Compressor vane carrier
Damage from stage 5
Compressor Rotor
Damage from stage 5
25 April 2018 2018 Onshore Energy Forum - Dubai 48Solar problems
l Solar – PV cells, vulnerable to storm
force wind, dust, fire
l CSP – easy to generate fires with
mirrors
25 April 2018 2018 Onshore Energy Forum - Dubai 49Wind turbine over speed failure, just after blade installation
– Westphalia, Germany
Enercon E115 – 3MW Diameter 115m, hub height 149.5m
25 April 2018 2018 Onshore Energy Forum - Dubai 50Claims issues – personal view lSpeed of the process – too slow lClaim outcomes highly dependent upon the individuals involved lDoes the insurance industry fully understand the power business? lPolicy wording “archaic” – but proven lMarkets becoming more complex lDo we use non-OEM parts in repairs? 25 April 2018 2018 Onshore Energy Forum - Dubai 51
Issues for the Insurance Industry – “from a user perspective”
Don’t do this!
l Does your product work?
l Do your customers understand what they have bought?
l Do you understand how your customers are using it?
l Do you understand the technology and markets?
l Insurance industry too expensive - fees, margins,
commissions, high overheads
l Please can it be lower cost
l When is the insurance world going to be attacked by a
disruptive force?
25 April 2018 2018 Onshore Energy Forum - Dubai 52Conclusions
lNeed constructive dialogue between all parts of the
insurance industry, including customers
lSharing of insurance industry technical issues, with
insured
lEngie delighted to support this initiative
lA competent and competitive insurance industry is
good for both insured and insurance industry
lStop crying about the soft market!
25 April 2018 2018 Onshore Energy Forum - Dubai 53Any questions …
25 April 2018 2018 Onshore Energy Forum - Dubai
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