IMIA NEWS SHEET. The International Association of Engineering Insurers TM. June Welcome to the 9 th edition of the IMIA News Sheet.

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1 IMIA The International Association of Engineering Insurers TM NEWS SHEET June 2008 Welcome to the 9 th edition of the IMIA News Sheet. 1 News from the Secretariat Preparation of the next Annual Conference is making good progress. We will have an unusually high number of participants which is partly due to a number of new Members who have joined IMIA since last year. The Agenda of the meetings will be on our website within the next days. Only very few new interesting claims were reported. Reports from the Working Groups 2008 show they are in most cases progressing well. Two of the papers are already on our website (Members Area, Papers for Conference 2008), and it is expected that the others will be made available soon. In respect of short papers from Delegates we are grateful for the three very interesting papers that were sent and which we distributed to all Delegates. They are now also available on our website under Library, Short Papers by Delegates. We also got a few articles which will be placed more suitably under External Papers. We would like to see more of such papers from our Members and hope that the examples now at hand will prompt more Delegates to produce a short paper on an interesting topic, loss, risk or insurance matter which may already be dealt with or worthy of being dealt with within their organisations. 2 News from the Executive Committee The EC met in London on June 11 th and dealt with the progress on the 2008 Working Groups, the support in getting short papers, the issue of a possible fee reduction and

2 2 of course the details of the upcoming conference. One IMIA company member who had conveyed suggestions as to how to improve the effectiveness of IMIA's activity was invited to join the discussion during part of the meeting. The possible composition of the EC after Gleneagles was also discussed at some length. The elections document on our website (Members Area, Papers for Conference 2008) will give you an idea of the changes within the EC envisaged to take place after the Gleneagles conference. The next EC meeting will be held on 13 th Sep at Gleneagles. 3 Member / Delegate News There are a lot of changes in respect of Delegates. Further new Members have also joined IMIA since we last reported. These are AMIS (the association of Mexico), Mapfre (Spanish Company), Cunningham Lindsey Mexico (loss adjusters) and AON Brokers. You can see the latest lists on our website under Members. 4 Engineering Insurance Market news 4.1 The German association reports that some changes will take place for a better streamlining of the Property/Accident structure. The present 7 sections will be reduced to 3: Industry, Private and Motor. Also the number of subsections/working groups will be reduced. The section benefitting most by these changes is Engineering Insurance having its own individual working commission, a good sign for our class of business! 4.2 Partner Re had its Engineering and Construction Conference 2008 in Zürich first week in June. Detmar Heidenhain gave a paper on IMIA Striving for Excellence in Engineering Insurance which was followed by a lively discussion. We will be reporting on the main items of interest of the conference separately and DH s paper will be displayed also on our website. 5 Website Usage The website statistics show a quite dramatic increase of usage of the website information over the last year: - There are 45 % more individual users - 70% more visits, - 30% more pages were visited - IMIA Working Group papers of the last three years are on the top of interest - Of the external papers the tunneling code of practice of various languages is the one most frequently seen - Great interest is also shown in the IMIA statistics, historical repflections, annual conference, non-renewable covers and MunichRe examples of wordings. Claims examles are temporarily seen less often than previously.

3 3 6 Risk News 6.1 Show games stadium, Belgium Belgium is planning a show games facility covering the area of a former quarry. The roof for the show skiing facility will cover the 90 meters deep quarry with an area of 100,000 sqm and shall consist of a hugh PVC sheet supported by a ropestructure ancored in the rock walls of the former quarry. It streches over a length of close to 300 meters. Part of the contract value of some EUR 100 million is for a hotel, and this is the easier part of this demanding project to insure. 6.2 Update on the Gautrain Project, Johannesburg First details of this project were reported in our 6 th issue of the News Sheet in June last year. The April 2008 update on the project states that the project moves ahead well and the final completion will be on time in The transport system is expected to be used by 150,000 commuters per day. The costs of the project are estimated at 25 billion Rand (approximately EUR 2.12 billion). Here are some impressive pictures:

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5 5 7 Interesting new Claims 7.1 Norwegian Arbitration Tribunal decided on a tunnel construction case A report of an interesting Norwegian Arbitration Award refers to a loss (but in the end not a claim) that happened in October 2005 during the construction of a tunnel for cooling water intake under the sea in connection with the development of a gas processing project. The gas field is an on-shore based plant in Norway with a final contract value of NOK 15,700,000,000 (US$ 3.0 billion). Hydro is the operator and responsible for the planning and development of the project. ENORMOUS DIMENSIONS: On peak, 2500 people will be involved during the development phase at Nyhamna.

6 6 The project was insured for a period of: March 2004 to December 2007 plus 24 months of maintenance. A problem on this project occurred during the completion of the underground seawater inlet tunnel, when the final penetrative blasting carried out in October 2005 failed to remove the residual rock plug and no piecing of the tunnel had occurred. The contractor investigated various alternatives of how to complete the piercing. It was finally decided to achieve the piercing by another blasting, and the method and ways of performing that blast were investigated, and the blast was successfully done. The contractor has a reputation of doing a very good job, but pursuing claims very strongly. In fact he wanted to claim the failure of final piercing as a loss indemnified under the CAR Policy. But this was denied. In an arbitration proceeding July 2007 they claimed for the costs of the works for preparing and blasting the remaining plug for piercing the tunnel, which were estimated at more than NOK 16 million (approximately US$ 3 million). The Policy is subject to Norwegian law and jurisdiction. On this basis the Arbitral Tribunal in the Court of Appeal House in Oslo, referring to the "Introduction to Insurance Law", found the contractor s loss not being a claim under the Policy and concluded in favour of the Insurers. This happened in January The project is now in the maintenance period. 6.2 Fracture of shaft of a wind turbo generator Technical Data: Type: NM 60/1000, diameter of rotor 60 M, max. output KW height of tower: 70m The wind turbine was in operation since August 2000 Its value: EUR 1.2 million (US$ 1.8 million). Loss: Approximately EUR 800,000. (US$ 1.2 million) property damage i.e. this constitutes a total loss Loss occurrence: Fracture of the main shaft between rotor hub and main bearing during a mild storm Cause of loss: most likely due to crack developed by vibration and induced change in material condition at the surface due to lightening.

7 7 6.3 Large fire at the Philharmonic Building of Berlin This building constructed in 1963 was designed by the architect Hans Scharoun and is famous for its asymmetric form and unique acoustic quality.

8 8 On Monday the 19th Mai 2008 several 100 square meters of the roof were destroyed by a fire The investigation proved that the fire was caused by welding works carried out under the roof. This example shows again, how important it is to take proper precautions and fire protection when hot works are carried out in an environment of valuable existing property. 8 IMIA Conferences 2009 / 2010 Preparation for the 2009 conference at Istanbul has started. Also the venue of the 2010 conference has now been confirmed, which will be hosted by the German association at Berlin, incidentally 20 years after East and West Berlin / Germany were reunited.

9 9 9 Last but not least It looks very risky, the Grand Canyon Skywalk, the glass bridge which is suspended 4,000 feet above the Colorado River on the very edge of the Grand Canyon. The construction began in March of The final test was conducted and the structure passed engineering requirements by 400 percent.

10 The bridge is able to sustain winds in excess of 100 miles per hour from 8 different directions, as well as an 8.0 magnitude earthquake within 50 miles. More than one million pounds of steel has gone into the construction of the Grand Canyon Skywalk: 10 Your IMIA EC Team UG