willistowerswatson.com

Bitesize Decom Event

22nd August 2018

Jim Rutherford Business Development Manager, Chubb Insurance Company

Brian Martin Branch Director, Willis Towers Watson

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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.

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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.