bitesize decom event
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willistowerswatson.com
Bitesize Decom Event
22nd August 2018
Jim Rutherford Business Development Manager, Chubb Insurance Company
Brian Martin Branch Director, Willis Towers Watson
© 2017 Willis Towers Watson Plc. All rights reserved. Proprietary and Confidential. 1
Evolving nature of risk in the offshore and decommissioning sectorsToday’s discussion points
• What does insurance cover?• Evolving contractual risk in decommissioning• Use of drones• NORMS• Equipment risks
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What Does Insurance Cover?
Operator
• Installations• Downhole Plant & Equipment• Pipelines• Pollution• Control of Well• Operator employee risks
Contractor
• Contractor Plant & Equipment• Pollution from contractor plant• Contractor employee risks• “Underground Resources” exclusion
Vessels
• Hull and marine liabilities• Contracting operations from vessel• Vessel crew risks
Knock for Knock contracts
Month XX, 2016
The LOGIC Contract
Who are the parties to the contract?
• “Contractor Group” and “Company Group”• Industry Mutual Hold Harmless Deed
Mutual indemnity / hold harmless provisions in relation to:
• Loss of or damage to property• Liability for death of or personal injury to employees• Consequential loss• Pollution
Waiver of insurer subrogation rights
Additional Insured parties
The aggregation impact on insurers
Month XX, 2016
Contractual ArrangementsNo “standard” LOGIC – What we are seeing so far…
Same Liability and Indemnity regime with de-contstructions as with construction contracts
GBP 100,000,000 Consequential Loss/Damage to exisiting Property/Pollution Requirements
Make sure you engage with your insurance broker early
Use of DronesStandard liability policy exclusion
Aircraft
arising from or caused by the ownership possession control or use by or on behalf of the Insured of any aerospatial device or any airborne craft or the loading or unloading of such craft
NORM
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Issue and Solution
Most insurance policies incorparate an exclusion for radioactive contamination. This is widely accepted by businesses as generally the potential exposure to such risk is minimimal.
Decommissioning works can generate a specific exposure to NORM – Naturally Occurring Radioactive Material.
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.
Scenario ROV/tooling engaged in decommissioning works which exposes the equipment to NORM
Issue Contamination by radioactive material arguably terminates the insurance cover under a standard exclusion
Solution We overcome the radioactive exclusion in respect of unrelated losses for physical loss or damage. We seek a solution for the clean-up costs arrising from potential contamination.We address increased costs incurred through contamination by NORM
Problem? Was contamination by NORM known prior to the scope of work commencing ie. was it a fortuity or inevitable. Inevitable events are not generally insurable!
Equipment Risks
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Wide and varied
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.
Risk Considerations Equipment integrity and maintenanceScope of worksWeather and sea state conditionsLaunch and recovery proceduresGeographical/political situation
What does your insurance cover provide?
Loss scenarios actions Authority to initiate search and rescue without notification?Utilising third party vessels and ROVs?Replacement equipment costs include air freight to reduce down time?
9© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.
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