THE WILLIS ENERGY LOSS DATABASE 2011

1. THE WILLIS ENERGY LOSS DATABASE 2011

2. OVERVIEW • Background • Property included • Database information • Purpose of database • Types of reports available • Information sources • Confidentiality • Subscriptions & Subscribers • Disclaimer

3. BACKGROUND • Idea conceived in 1994, commercially available from 1997 • Created in recognition of general lack of industry information • Marine and Aviation losses are well reported but not Energy unless they are major and/or involve death or injury • This is a unique facility

4. PROPERTY INCLUDED • Offshore/Onshore – E&P Upstream • - Rigs/FPSOs/FSOs/FPUs etc • - Platforms • - Pipelines • - Oil sands • - Storage & offloading systems • Onshore – Midstream/Downstream • - Refineries, petrochemical plants etc. • - Loading terminals, tank farms • - Power Stations, wind farms • - Gas plants, transmission stations

5. DATABASE INFORMATION • Only for losses of US$1,000,000 or more at time of loss • Information captured is from 1972 to date • All amounts shown in US$ exchanged at date of loss rate of exchange • Property related losses – no liability in isolation • Amounts relate to PD, OEE (cost of control etc.) and BI • Contains 9,000 individual records with an aggregate time of loss value greater than US$148 billion (>US$198 billion indexed) • Except for BI this is a loss database not an insurance database therefore PD, OEE & S&P costs are for 100% interest FGU on the basis of no deductible and no limit – the incident does not have to have been insured but it does have to have been insurable

6. PURPOSE OF DATABASE • To assist in the evaluation and review of current and future insurance strategies – both buying and selling, direct and reinsurance • To help understand the dynamics between losses and pricing • To provide activity profiles and market share analyses for contributing Loss Adjusters • Subscribed to by oil companies, insurers/reinsurers and major brokers • Used by academic establishments – forms part of the “Energy Insurance and Risk Management” course run by the Bauer College of Business at the University of Houston

7. SOME OF OUR SUBSCRIBERS…

8. REPORTS AVAILABLE • Summary: No. of incidents, aggregate & average $ • - by year • - by geographical area, country or location • - by cause • - by property type • - by month (seasonal trends) • - by cost bandwidths • - by well depth • - any combination of the above • Listings of individual losses by date or value

9. REPORT EXAMPLE 1: An independent oil company operating only onshore USA wishes to review their current OEE limits of $5M. What can the database tell them about the adequacy of their OEE limit in light of industry experience? Database search criteria: Country = USA, Land/Offshore = Land, Loss Type = OEE

12. To download into Excel just click here We will now look at 2 other reports with the same data set – firstly by location

13. To download into Excel just click here And secondly by cost category (using indexed as we are looking at + 30 years of data)

14. This tells us: • An OEE limit of $5M would have been adequate for 467/711 or 66% of known OEE losses excess of $1M • Increasing the OEE limit to $10M would account for 605/711 or 85% and so on…

15. REPORT EXAMPLE 2: Analysis of European refinery losses since 1990 based on frequency and severity excluding the causes of earthquake and subsidence Database search criteria: Year of Loss = 1990 to 2010, Area = Europe, Subcategory = Refinery, Cause = all (excluding earthquake and subsidence/landslide)

16. Frequency

17. Severity

18. Cause

19. List by value

20. REPORT EXAMPLE 3: A comparison of offshore pipeline losses in both the construction and operating phases in four different areas of the world. As this coverage is usually purchased on a limit rather than value basis, what is the industry experience of loss severity?

21. OFFSHORE PIPELINE LOSSES BY CLAIM AMOUNT This shows where 90% of the losses reside

22. INFORMATION SOURCES: • Willis records • Willis dedicated research team located in Mumbai • Loss Adjusters • Insurers & Captives • Historical data (London Master Energy Line Slip) • The press (limited information available)

23. CONFIDENTIALITY: • Guarantees have been given to information providers that only restricted information will be produced which means that: • Names of Assureds are not revealed • Names of contributors are not revealed • Obvious information to aid identification such as name of facility or precise location are not revealed • Access to the database is strictly controlled

24. SUBSCRIPTIONS: • Price (on application) is for a multi-user annual licence for access via the internet. No additional software is required • Subscriptions go towards maintaining and developing the database • Without sufficient income the facility will be discontinued – it should be regarded as an energy insurance industry tool • Subscribed to by oil companies, direct and reinsurance underwriters and major brokers

25. JUST ADDED: • Additional fields showing • Gulf of Mexico Area • US Location Code (OEE only) • Upstream, downstream or power • Subcategory 2 (lower level description of property) • The ability to generate and download custom reports based on up to 12 fields of your choice

29. DISCLAIMER: The entries in the database have been obtained from a variety of sources. Willis Limited does not accept any responsibility for the accuracy or completeness of the information contained therein.

30. THE WILLIS ENERGY LOSS DATABASE 2011 http://online1.willis.com/sites/weld/W_ELViewer.aspx