The 5 th International Istanbul Insurance Conference

1. The 5th International Istanbul Insurance Conference LOSS PREVENTION AND RISK IMPROVEMENT HAKAN ILERI ISTANBUL, 3rd October 2013

2. CONTENTS Introduction Expectations of the Reinsurers Current Situation Loss Prevention Measures Improving the Risk Standards Cases

3. INTRODUCTION Riskier World Local Players’ Roles Innovations by Reinsurers Risk Management Approach Importance of Risk Surveys

4. 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

5. THE THEORY IS SIMPLE INTRODUCTION Insurer • Extent • Causation • Coverage/Liability • Indemnification • Subrogation • Loss Mitigation • Repair • ….. Claim Policy Insured

6. 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

7. 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 -

8. 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 -

9. WHERE DO THEY MEET? Prevent Losses Prevent Losses Prevent Losses Accurate & Consistent View of Risk Fair ClaimsPayments Avoid Surprises

10. 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

11. LOSS PREVENTION MEASURES SUMMARY Identification of Risks Risk Improvements Development of Loss Control Programme Business Continuity Plan Maintaining the programme

12. 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.

13. LOSS PREVENTION MEASURES RISK SURVEYS EXAMPLES

14. LOSS PREVENTION MEASURES EXAMPLES We have proven equipment!

15. EXAMPLES LOSS PREVENTION MEASURES We use qualified contractors only!

16. EXAMPLES LOSS PREVENTION MEASURES Ooops!

17. EXAMPLES LOSS PREVENTION MEASURES We have strict procedures and standards...... ?

18. EXAMPLES LOSS PREVENTION MEASURES Our staff are highly motivated .............

19. EXAMPLES LOSS PREVENTION MEASURES We have fire doors ... Yes, but the walls are not..

20. EXAMPLES LOSS PREVENTION MEASURES We are painters, we paint everything…

21. EXAMPLES LOSS PREVENTION MEASURES No comments…

22. LOSS PREVENTION MEASURES Fire truck? EXAMPLES

23. EXAMPLES LOSS PREVENTION MEASURES Fire door. But what is it?

24. EXAMPLES LOSS PREVENTION MEASURES Risk prevention is not a game…

25. 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

26. 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

27. 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

28. EXPLOSION AND FIRE – OIL REFINERY IN SPAIN CASES

29. EXPLOSION AND FIRE – OIL REFINERY IN SPAIN CASES

30. EXPLOSION AND FIRE – OIL REFINERY IN SPAIN CASES

31. FIRE & BUSINESS INTERRUPTION–VARNISH & COATINGS MANUFACTURING PLANT IN TURKEY CASES

32. EARTHQUAKE / INDUSTRIAL PLANT IN ITALY CASES

33. CASES FIRE – COMMERCIAL BUILDING IN SPAIN

34. FIRE – COMMERCIAL BUILDING IN SPAIN CASES

35. COLLAPSE OF H2SO4 TANK – FERTILIZER FACTORY CASES

36. CASES COLLAPSE OF H2SO4 TANK – FERTILIZER FACTORY

37. FIRE – PRINTING FACTORY IN IFRANCE CASES

38. FIRE – CONSTRUCTION PROJECT IN KAZAKHISTAN CASES

39. CASES FIRE – CONSTRUCTION PROJECT IN KAZAKHISTAN

40. FIRE – PVC FACTORY IN TURKEY CASES

41. CASES FIRE – PVC FACTORY IN TURKEY

42. CASES FIRE – PVC FACTORY IN TURKEY

43. CASES ACCIDENT DURING START-UO – HIGH SPEED TRAIN IN MEXICO

44. ACCIDENT DURING START-UO – HIGH SPEED TRAIN IN MEXICO CASES

45. THANK YOU / TESEKKURLER

46. HAKAN ILERI HILERI@ADDVALORAGLOBAL.COM +44 7812 77 44 77