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Renewable Energy Exposures, Claims and Claim Services

Renewable Energy Exposures, Claims and Claim Services. Derek Patterson, Crawford & Company Middle East. AGENDA. Crawford and Company Claims Process World Trends Exposures/ Risks Sharing Risks Linked to Renewables Focus on Wind Energy Claims Types Challenges in dealing with Claims

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Renewable Energy Exposures, Claims and Claim Services

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  1. Renewable EnergyExposures, Claims and Claim Services Derek Patterson, Crawford & Company Middle East

  2. AGENDA • Crawford and Company • Claims Process • World Trends • Exposures/ Risks Sharing • Risks Linked to Renewables • Focus on Wind Energy • Claims Types • Challenges in dealing with Claims • Crawford Brochure

  3. Crawford & Company Inc, Atlanta • Crawford & Company – 70 countries – 8,000 staff – US$1.2 billion • Property & Casualty division; Crawford & Company • Financial Services; The Garden City Group • Healthcare + TPA Administration; Broadspire • Property & Casualty Division • America’s: USA, Canada, Central and Latin America • EMEA AP: Asia, CEMEA, UK • CEMEA • Middle East : Part of CEMEA • Derek Patterson, Regional MD - Middel East • Renewable Energy Practice Leader • Mark Vos, Head of Global Technical Services CEMEA • David Dimelow, Global Technical Services UK

  4. 2. Claims Process Important to start on the right foot - set the tone for the way the claim will proceed Notification and Acknowledgement Has the policy been triggered? Coverage Plan of action Claim Strategy Communicate loss to insurers Insurer Contact Prove your claim! Information Gathering and Analysis What is the desired outcome? Negotiation Collection of funds Settlement Are the clients rights being protected? Subrogation Management

  5. Insurance Claim Timeline Claim Closed Collect and transfer funds Sign Proof of Loss Insurers Agreement Settlement Negotiations Final Report Final Claim Submission Final Coverage Analysis Partial Claim Submission Adjusters Preliminary Report is issued to (Re)Insurers Interim Report issued recommending Advance RCA Initial Coverage Analysis Loss Adjuster Visit Loss Notification Date Of Loss - 6

  6. Claim ProceduresPost incident actions Take all reasonable steps to prevent further damage. Acting at all times as a prudent uninsured. Prior to commencement of dismantling/repair work, take photographs of the incident scene and the damaged equipment/parts use of video footage is becoming more common Preserve damaged equipment/parts for further inspection by the appointed Loss Adjuster / External Experts protect from the elements Designated ‘Lay Down Area’ Notification to third parties holding them responsible for loss in order to preserve Insurer’s rights of recovery. 7

  7. Claim ProceduresPost incident actions Investigate the loss & identify cause(s) Root cause analysis essential to the adjustment of the claim essential to prevent recurrence secure documents, drawings, specifications etc. obtain witness statements When a Loss Adjuster is appointed, agree expenditure and actions in advance with him need to establish a primary contact for communications with the Loss Adjuster 8

  8. Post Incident ActionsThe importance of Cause and Origin Underwriting • Statistics • Loss prevention Subrogation • Not employees • Equipment vendors • Contractors World class experts in relevant specializations may be employed to determine cause.

  9. Claim ProceduresPost incident actions - PD Assessment Protocol • Inspection • Determination of most economic repair options • Options discussed with BI team for their approval • Agreement on methodology of testing and interpretation of results • Agreement with Insured on proposed repair-replacement • Discussion with BI team on economics of expediting; overtime, air-freighting, domestic or import procurement • Review all tender bids and appraise final choice • Preparation of critical path schedule for repair stages

  10. Claim ProceduresPost incident actions Effect temporary / emergency repairs required to resume operations. Obtain witness statements as soon as possible while memories are clear. If applicable restore fire protection to site. 11

  11. Claim ProceduresPost incident actions Open a claim file Keep duplicates of all information given to other parties (loss adjusters, brokers, contractors, licensors, suppliers, vendors, consultants etc.) Document everything. All expenses relating to the loss should be carefully recorded via allocated cost-center including: repair and replacement costs labor & supervision (time sheets) expenses incurred to mitigate the loss (labor, emergency response, equipment etc.) 12

  12. Claim ProceduresPost incident actions Third partly liability claims: Do not admit to or assume responsibility / fault for the injury or damage (even verbally) Cooperate fully with legal authorities Do not guarantee payment for any damages or injuries Open a claim file in which duplicates of all relevant documentation should be held After initial contact, limit communications with any third party claimants Any communication received from a third party should be forwarded without reply to Risk Management. 13

  13. Claim ProceduresPost incident actions Claims progress reporting Preservation of recovery opportunities protect insurers rights of recovery against third parties – do not prejudice possible subrogation actions disposal of scrap and debris, salvage etc. to be agreed with Loss Adjuster 14

  14. 3. World Energy Consumption • World Consumption is 15 Tera Watt (TW)

  15. Energy Resources • Energy resources, which can be tapped.

  16. 4. Exposures • 1: Profitability • Governments or Private Energy Suppliers • Subsidies, Profit & Loss < -- > CO2 Consumption • 1kWh = 0,7kg CO2 = 110 Trees CO2 Annual Consumption • 2: Feasibility of Energy Resource • Do we have the right location. • Which concession do need to consider. • 3: Reliability of Technical Operation • Continued demand pushes ‘continued prototyping’ • 4: Life Cycle of Investment • Replacement versus Technology

  17. 4.1 Exposures & Risk Sharing • Financial Risk Sharing • Banks (investment + cashflow protection to investor) – ALOP/ DSU • Public-Private Partnership (PPS); subsidy – ALOP/ DSU • Operational Risk Sharing • Availability / Performance Risk [energy source and generator (BI)] • Investment protection (PD, MB, BI) • Environmental regulation (Liability) • Public/ community (Liability) • Technical Risk Sharing • Technical Design and Maintenance (PD + MB) • Proto-typing and serial risk (Warranty, Guarantee) • Investment and design (CAR, EAR, PD+MB)

  18. 5. Renewable Energy Hazards • Bio Energy • Bio-gas (methane gas-mix /explosion & sulphur corrosion) • Bio-fuels; pulp / algae / Canola seed oil (agricultural risks) • Bio-energy research: living organism & light (natural risks) • Hydro Energy • Hydro power: Rainwater, rivers and glacier rivers (climate/ natural/ engineering) • Tidal power: Efficiency & Location (natural/ engineering) • Geo Energy • Thermal pumps: small scale applications (natural/ engineering) • Volcanic areas larger potential and application like Iceland

  19. 6. Renewable Energy Projections - Wind • Wind Energy – Subsidies Europe • The costprice of wind energy (net cost) at 1.760 “ full load hours" is 11 cent per kWh for a period of 15 years of projects awarded in 2008. The subsidy balances the right value vs the electricity price. At 3,330 (full load hours)  €1,7 cent subsidy/ kWh. • At 1,760 hrs projects receives a subsidy of: "1.760 * (11,0-7,8) * project capacity in kW". A turbine of say 3 MW (3.000 kW) received in 2008:  (maximum) 1,760 * 0,032 * 3.000 = € 168.960. • New Zealand, Australia, Aruba,Turkey = No subsidy

  20. Altamont Region 10 m, 26 ft 0.15 MW 6.1 Wind Industry Growth Trends • Larger multi-MW turbines • Demand for new innovative technologies • Led by European investment • Offshore & low wind regime focus in U.S. Vestas V112 3 MW 2009 Blade Tip Max 200 m/s=720km/h

  21. Energy resources, which can be tapped.

  22. Rotor –gear box – control panel – contactor panel - generator set Rotor –gear box – control panel – contactor panel - generator set Typical Wind Turbine Construction Rotor –gear box – control panel – contactor panel - generator set

  23. 7. Most Common Types Of Claims Erection (EAR/CAR) • Transport – Damage to blades and nacelle / turbine • Handling – Damage during erection • Natural Perils • Fire damage during commissioning • Design – monopile connection to transition piece Operational (PD / MB) • Weather – lightning strikes / storm / hail (solar arrays) • Fire – malfunction and maintenance activity • Machinery Breakdown – braking system / Generator shorting / - control panel electronics / mechanical

  24. Typical Fire Damage

  25. Typical Damage

  26. 7. Most Common Type of Claims Financial (BI) • Triggered by Material Damage or Machinery Breakdown • Loss of Capacity / Revenue • Time deductible / Waiting period Liability (Public Liability / Product Liability / Prof. Indemnity • Claims against wind turbine manufacturers & wind farm operators • Excessive noise, damage to property, economic loss, emotional distress • Injunctive relief, costs and punitive damage • Contravention of enviromental legislation • PL claims for non-performance • PI claims for design failures (monopile)

  27. Cost Structure

  28. Claim Challenges • The claim process remains the same • Challenges in respect of logistics / costs related thereto • Logistics / costs for marine offshore spread US$ 100k

  29. 9. Crawford Renewable Energy Practice

  30. Crawford - Global Technical Services

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