18 th Issue - June News from the International Association of Engineering Insurers. Page

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1 IMIA NEWS 18 th Issue - June 2011 News from the International Association of Engineering Insurers The Hoover Dam Bridge reached Completion More inside on page 4 In this edition Page Page News from the Executive Committee 2 What is new on 2 Steam turbine disruption in a power plant 5 Seminar on risk engineering in Istanbul 7 Forensic photographing 3 The Twister project in Stockholm 8 FIDES conference in Honduras 4 Japan Power Crisis - A Fast-Track Solution for GE 5 1

1 News from the Executive Committee The EC and the Secretariat jointly with the Dutch Hosts are busy organising the annual conference in Amsterdam.

2 1 News from the Executive Committee The EC and the Secretariat jointly with the Dutch Hosts are busy organising the annual conference in Amsterdam. Of the 110 IMIA Delegates we now have, 99 have applied for attendance with a few still considering joining if they can make it. This is the highest number we ever had, and further growth is indicated by new IMIA memberships being considered. The EC had its last meeting on 3 rd June and, besides the Amsterdam conference, these are the main points discussed: - Confirmed new Members are: Ping An (Mr. Shi YUHUI), Cunningham Lindsey International (Rupert Travis), Amlin Re Europe (Martin Frey), AXA India (Balaji Cuddapah), Liberty USA (Timothy Kania) - New agreed membership requests are: Fenchurch Faris, Greece (Michael Mangos) and Matson Driscoll & Damico, forensic accountants (Flemming Jensen) - Max Benz, XL Insurance, had been co-opted by the EC as a new EC Member to be confirmed by elections at the Amsterdam conference. - Progress of IMIA working groups: The first two of the IMIA WG papers have been completed and are now on the IMIA website, Members Area, Papers for conference The completion of the other two is making good progress. - The topics selected for next year s IMIA WG papers have been sent out to all Delegates for them to volunteer for cooperation in one of the working groups. Please do consider joining one of the groups. - Possible topics for discussions during the Breakout Session at the conference have been reviewed and will be sent out soon. 2 What is new on There is a new picture on the home page to start with, but what is of more importance is the revised and new information in the Members Area regarding the Amsterdam conference in September. Please check for up-dates of the Agenda and the new documents under submenus Conference Invitation Papers 2011 and Papers for Conference The latter section is still developing as a number of new papers and documents is still being worked upon, but will gradually be included before the conference, so that you will have all papers and information available well beforehand. National Reports are slowly coming in and will be distributed to Delegates and the usual summaries (Country Analysis reports) will be placed on the website (Library Country Reports) and gradually replace those of last year. There is also a new Short Paper in the Library: A word on Tailing Dams which deals with the reason of failures and what is recommended for underwriters to check. Here is a link to the paper: 2

3 As regards our photo competition, please send in one or two of your

The winner will be announced at the Amsterdam conference.

specialized forensic photographing can make visible.

only used in research of biological or physical science, but also in the

Here are a few examples of what details can be made visible: An ant

3 3 As regards our photo competition, please send in one or two of your best photos on any technical or loss matter. The winner will be announced at the Amsterdam conference. 4 Forensic photographing What our natural eye cannot see, detailed and specialized forensic photographing can make visible. This kind of analyzing photography with an electron microscope is not only used in research of biological or physical science, but also in the analysis in the cause of losses on components of property insured. Here are a few examples of what details can be made visible: An ant holding a microchip Surface of a Programmable Memory silicon chip Material stuck between two shaving razor blades Corrosion on a rusted surface of steel 3

5 Fides Conference in Honduras (by Oscar Treceno) The Latin American Insurance Conference of FIDES (Federacion Interamericana de Empresas de Seguros) took place in Honduras from May 29th to June 1st.

The speech of Alvaro Uribe, former Colombian President, was one of the most relevant acts at the Conference, he gave pertinent details on how the insurance industry helped to stabilise the economy in

4 5 Fides Conference in Honduras (by Oscar Treceno) The Latin American Insurance Conference of FIDES (Federacion Interamericana de Empresas de Seguros) took place in Honduras from May 29th to June 1st. With more than 1000 participants representing a large number of insurance, reinsurance, broker and loss adjuster companies this is the most important insurance conference for the Latam Region. The speech of Alvaro Uribe, former Colombian President, was one of the most relevant acts at the Conference, he gave pertinent details on how the insurance industry helped to stabilise the economy in Columbia by giving coverage to the local entrepreneurs to cope with unforeseeable situations, and therefore smoothen their capital requirements with the help of insurance solutions. In conjunction with an event sponsored by Nationale Suisse, IMIA has been clearly mentioned in conjunction with our coming conference 2012 in Brazil. This raised the interest from many participants to consider their participation (membership) also in our specialised & dedicated IMIA forum for Engineering Insurance matters. Many subjects were discussed during the conference, for example: limited capacity for Cat Nat exposed areas, new strict regulations related to cross boarder business in Brazil and Argentina (new rules and law related to insurance / reinsurance), growing requirements in terms of new infrastructure projects related to the economical development and political stability reached in the region over the last decade, to mentioned and few of the subjects discussed. 6 The Hoover Dam Bridge (up-date) We had previously reported on this quite daring project in December

It has now been completed end of 2010 after five years of construction. Its contract value was some 280 million US$. The bridge is 600 meters long and is the main part of a 5.6 km road structure.

marketplace, Equisales was recently contacted by GE to provide 4 large GSU transformers and related equipment to GE Aero to help GE's emergency response to the Japan Relief Effort.

5 It has now been completed end of 2010 after five years of construction. Its contract value was some 280 million US$. The bridge is 600 meters long and is the main part of a 5.6 km road structure. View of the completed bridge over the Colorado River valley 7 Japan Power Crisis - A Fast-Track Solution for GE As the largest "fast-track" source of transformers and related services in the marketplace, Equisales was recently contacted by GE to provide 4 large GSU transformers and related equipment to GE Aero to help GE's emergency response to the Japan Relief Effort. GE is renting essential equipment to Tokyo Electric Power (TEPCO) for 2 years, and Equisales is providing the transformers. The GSU transformers will allow 250 MW of electricity to be put online on a "fast-track" basis in a critical area of Japan that was damaged by the earthquake and Tsunami on March 12th. Teams from Equisales tested and dismantled these 4 transformers in less than 5 days (20 days ahead of our estimated schedule) in order to make the April 2nd departure date by a dedicated ship from The Port of Houston. The crews worked 18 hour a day by rotating shifts in inclement weather. Moving GSU transformer to Japan 8 Steam turbine disruption in a bio mass burning power plant (India) (by Milind Bhatawadekar) The plant is a valid Clean Development Mechanism project. This means that when it produces electricity, the power plant will also earn carbon credits (CERs) that can be sold to buyers who have emissions reductions targets. Thus, revenue of the plant is from sale of power as well as of carbon credits. The power plants turbine is a 7.5 MW unit installed in 2004, normally operating at 7,500 PRM with a reduction gearbox between turbine and generator. On , following certain problems in grid operation, the power purchaser instructed the Insured to de-synchronise the plant. The TG operator subsequently reduced the load gradually from 6.5 MW to about 1 MW (internal load to cater to auxiliaries) from 11:40:12 hrs to 11:49:12 hrs and then the generator breaker was opened. 5

6 After the generator breaker was opened, the turbine speed increased within a few seconds. At this speed the turbine tripped on high speed and simultaneously the operator tried to activate emergency stops. Suddenly turbine got ripped apart and broken pieces of the TG set components flew off with tremendous speed. The rotor shaft sheared near rear the journal pedestals and few pieces flew through the TG hall roof along with pieces of the high speed coupling, coupling guard etc. Broken pieces also damaged the Generator relay panel. Fire erupted in the front and rear bearing pedestal, but was extinguished before it spread beyond the bearing pedestals. Extent of damage (see also photographs attached): Turbine & Gearbox, High speed coupling & Condenser - damaged beyond repair, requiring replacement Generator & Low Speed coupling - no significant damages Generator relay panel - relays and instruments damaged Buildings - walls, windows and roof of TG building damaged. History of plant: A sister TG set originally installed at another plant of the insured was replaced by Siemens due to deficiency in its performance. Thus the initially erected turbine became redundant and was kept in the insured s store. During a planned annual shutdown in August 2008 at Insured s plant, an abnormality was noticed in the turbine rotor (crack in the first stage disc). For replacement of the rotor the rotor from the spare turbine was taken out, sent to a non- OEM workshop, for dimensional checks and balancing and then installed in place of the broken one, then commissioned and put into operation. At such stage the turbine was proposed for MB and MLoP insurance. The above critical fact of using an old rotor from another machine for erection and commissioning of the turbine was never revealed to Insurers. The amounts claimed by the Insured were: Material Damage: US $ 20,000,000 Business Interruption: US $ 20,000,000 When the loss had occurred, the following issues crop up: 1. The old, defective rotor that was lying idle was not the property of Insured. Despite written requests, Insured never clarified as to who owned the rotor which was lying idle. 2. Insured had installed this rotor without manufacturer s prior consent and review despite knowing the fact that the turbine was defective. 3. Insured did not reveal to Insurers the background of this rotor and its installation prior to inception of cover. It is difficult to assume that any independent risk engineer could have detected this fact merely by inspection or asking questions on operations of the machine. This fact could have become known only when voluntarily revealed. 4. It is quite logical that the engineering/technical ability of the non-oem agency without the knowledge of design and manufacturing data of a machine can never match the ability of an OEM who has the full background & data. 5. It is critical to question if the undisclosed facts were material to the risk or material to the cause of loss. 6. Can insurers deny honouring the claim? Is the policy void do to concealed facts of risk when the policy was underwritten? 6

The provider of this contribution leaves these questions open for the reader to discuss

Rear bearing pedestal and coupling area Turbine rotor shaft broken near journal Damaged

EC member, Richard Radevsky, who is also Technical Director, Charles Taylor technical,

engineers from insurance companies, surveyors and loss adjusters in Istanbul, Turkey.

7 The provider of this contribution leaves these questions open for the reader to discuss and find his own answer considering legal circumstances applicable in his view. Rear bearing pedestal and coupling area Turbine rotor shaft broken near journal Damaged casing, gears and shafts 9 Seminar on risk engineering in Istanbul (by Richard Radevsky) EC member, Richard Radevsky, who is also Technical Director, Charles Taylor technical, recently gave a seminar on risk engineering for major engineering projects to 40 engineers from insurance companies, surveyors and loss adjusters in Istanbul, Turkey. The seminar was held on behalf of a recently formed association of Turkish risk engineers and was hosted by 7

It is a single-track wooden roller coaster. This different construction/erection project was finished during May 2011 by the U.

8 Günes Sigorta, a major Turkish insurance company. This topic will also be presented at the annual IMIA conference in Amsterdam in September. 10 The Twister project in Stockholm (by Chris Blückert) The Twister project at Gröna Lund amusement park in Stockholm is a real mechanical / electrical assembling project. It is a single-track wooden roller coaster. This different construction/erection project was finished during May 2011 by the U.S company The Gravity Group, specialised in wooden roller coaster design and engineering. The roller coaster plant is constructed in the traditional way mainly of wood with supporting superstructures in steel. Construction period: approximately 9 months. Insurance cover: equal to Munich Re Comprehensive Project Insurance Some facts: Number of bolts: more than pcs Maximum lateral tilt: 51 degrees Maximum tilt: 56 degrees Speed: 60 km/h Length: 15.5 m The Engineering underwriter standing in front of The Twister has not (yet) agreed to be one of the test runners! ( The IMIA EC Team 8

The International Association of Engineering Insurers. Access Bridge - Ceneri Tunnel, Gero Stenzel, Partner Re

The International Association of Engineering Insurers About us Access Bridge - Ceneri Tunnel, Gero Stenzel, Partner Re IMIA Mission and Focus IMIA is a network of experts in Engineering Insurance from