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The 5 th International Istanbul Insurance Conference. LOSS PREVENTION AND RISK IMPROVEMENT HAKAN ILERI ISTANBUL, 3 rd October 2013. CONTENTS. Introduction. Expectations of the Reinsurers. Current Situation. Loss Prevention Measures. Improving the Risk Standards. Cases. INTRODUCTION.
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The 5th International Istanbul Insurance Conference LOSS PREVENTION AND RISK IMPROVEMENT HAKAN ILERI ISTANBUL, 3rd October 2013
CONTENTS Introduction Expectations of the Reinsurers Current Situation Loss Prevention Measures Improving the Risk Standards Cases
INTRODUCTION Riskier World Local Players’ Roles Innovations by Reinsurers Risk Management Approach Importance of Risk Surveys
IDEAL (Before the loss) REAL (As it turns out to be….) INTRODUCTION IDEAL VS REAL • Proven methods • Prudent acting • Competent personnel • Smooth cooperation • Reasonable budgeting • Reasonable schedules • Trial and error • Negligence • Ignorance • Chaos • Underfunding • Time pressure
THE THEORY IS SIMPLE INTRODUCTION Insurer • Extent • Causation • Coverage/Liability • Indemnification • Subrogation • Loss Mitigation • Repair • ….. Claim Policy Insured
INTRODUCTION THE REALITY: USUALLY COMPLICATED Co-Insurer(s) Insurer Re-Insurer(s) Underwriting Claims Lawyers Claim Policy Loss Adjuster Broker Experts Insured Sub-Contractors Project Site Design Principal Banks OEMs
INSURED INSURER EXPECTATIONS OF THE INSURED AND INSURER • Understand my business • Sufficient capacity • Accurate & Consistent View of Risk • Practical advice • Reasonable premium • Prevent losses • Avoid surprises • Fair claims payments • Understand exposure • Balanced portfolio • Accurate & Consistent View of Risk • Delivery solutions for client • Sufficient premium • Prevent losses • Avoid surprises • Fair claims payments - 4 -
EXPECTATIONS OF THE REINSURER Accurate & Consistent View of Risk Presentation of data in the requested format Sufficient premium Familiarity with the general principles of law governing reinsurance contract Prevent losses (risk improvement and loss control) Timely and Comprehensive Reporting Claims Control Fair claims payments - 4 -
WHERE DO THEY MEET? Prevent Losses Prevent Losses Prevent Losses Accurate & Consistent View of Risk Fair ClaimsPayments Avoid Surprises
CURRENT SITUATION • Differences in expectations • Lack of understanding and communication • Catastrophe Modelling • BI Exposure • Application of Loss Prevention Measures • Risk Managers • Claims Control – Post Loss Mitigation Measures
LOSS PREVENTION MEASURES SUMMARY Identification of Risks Risk Improvements Development of Loss Control Programme Business Continuity Plan Maintaining the programme
LOSS PREVENTION MEASURES RISK SURVEYS Find out if the risk offered is acceptable; Help in determining an appropriate rate to be charged; Make recommendations for improvement of the risk; Make an estimate of the maximum amount, or percentage of the risk that is likely to be lost in one fire or any other loss.
LOSS PREVENTION MEASURES RISK SURVEYS EXAMPLES
LOSS PREVENTION MEASURES EXAMPLES We have proven equipment!
EXAMPLES LOSS PREVENTION MEASURES We use qualified contractors only!
EXAMPLES LOSS PREVENTION MEASURES Ooops!
EXAMPLES LOSS PREVENTION MEASURES We have strict procedures and standards...... ?
EXAMPLES LOSS PREVENTION MEASURES Our staff are highly motivated .............
EXAMPLES LOSS PREVENTION MEASURES We have fire doors ... Yes, but the walls are not..
EXAMPLES LOSS PREVENTION MEASURES We are painters, we paint everything…
EXAMPLES LOSS PREVENTION MEASURES No comments…
LOSS PREVENTION MEASURES Fire truck? EXAMPLES
EXAMPLES LOSS PREVENTION MEASURES Fire door. But what is it?
EXAMPLES LOSS PREVENTION MEASURES Risk prevention is not a game…
RISK SURVEYS OBJECTIVES The purpose of the risk inspection program is to provide Insurers & Re-Insurers with a comprehensive understanding of this risk, including: • Overview of the Plant • Compliance of activities and equipment with the insurance proposal • Condition of equipment • Plant life management philosophy and implementation • Adequacy of maintenance strategy • Review of management and technical documentation and reports • Impact of differences on risk profile • PML considerations • Comments on environmental risks and political/social risks • If BI: review of contracts, redundancies, business figures, spare part inventory
RISK SURVEYS Specific Review Topics • Process and equipment characteristics • Prototypical elements • Plant organization • Maintenance approach, history and schedule • Fire protection, detection and suppression systems, inspection program and records • Fire plant/emergency response procedures • Capital spares for major equipment • HSE and QA/QC manuals • Example internal/external risk/safety audit reports • Accident/incident reports + details of any losses or incidents to date during site works • Client organization & management training program
IMPROVING RISK STANDARDS RECOMMENDATIONS Ability to Understand the Risk Contract Certainty / Willingness to Handle the Claims Product Innovation Risk Manager or Insurance Buyer? Appointment of Experts Pro-active approach in loss control programmes
FIRE & BUSINESS INTERRUPTION–VARNISH & COATINGS MANUFACTURING PLANT IN TURKEY CASES
CASES FIRE – COMMERCIAL BUILDING IN SPAIN
CASES COLLAPSE OF H2SO4 TANK – FERTILIZER FACTORY
CASES FIRE – CONSTRUCTION PROJECT IN KAZAKHISTAN
CASES FIRE – PVC FACTORY IN TURKEY
CASES FIRE – PVC FACTORY IN TURKEY
CASES ACCIDENT DURING START-UO – HIGH SPEED TRAIN IN MEXICO
HAKAN ILERI HILERI@ADDVALORAGLOBAL.COM +44 7812 77 44 77