boiler & machinery

7/31/2019 Boiler & Machinery

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Premier Healthcare 8-19-2009 1

Machinery Breakdown

Presented by:Donn Bordonaro, AVPSr. Underwriting Specialist


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Agenda

1. Introduction and objectives of todayswebcast session

2. Machinery Breakdown Perils

3. Underwriting considerations4. Service & Inspections5. Claims Services6. Loss Lessons


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Introduction

The objective of todays session is to discuss anddescribe Machinery Breakdown and build abetter understanding for Risk Managers and

Facility Managers.We will: Discuss the Machinery Breakdown perils. Look at the Underwriting Considerations used to develop the

coverage and pricing as we look to better understand theMachinery & Equipment exposures. Discuss Machinery Breakdown Risk Engineers Review lessons from losses, a look at actual losses.


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Machinery Breakdown Perils

Property Insurance Policies generally excludethe Machinery Breakdown Perils, or add themback by endorsement. They are usually:

Underwritten and reviewed by separate Boiler Underwriting Companies (Reinsurance), or

Underwritten and reviewed by Boiler Specialists at theCompany writing the Property & Boiler together.

Priced and underwritten with very differentconsiderations that involve the size, type and makeup of equipment found at Hospitals and Healthcarefacilities


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Abrupt & Accidental Breakdown* Abrupt and accidental breakdown of mechanical or

electrical system or apparatus which causes direct

physical loss or damage to all of or part of thatmechanical or electrical system or apparatus provided the direct physical loss or damage becomesmanifest at the time of the breakdown that caused it.

Electrical Injury Explosion of a steam boiler, steam piping or steam engine

*AKAS Mechanical Breakdown


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Mechanical or electrical system or apparatusmeans any: boiler, fired pressure vessel, unfired pressure vessel

normally subject to vacuum or internal pressure other than weight of its content, refrigerating and air conditioning vessels, including metal piping and itsaccessory equipment connected thereto; and

mechanical or electrical machine or apparatus usedfor the generation, transmission or utilization of mechanical or electrical power.


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Underwriting Considerations

Insurance Companies are interested in knowingthe make up of exposures at each facility in aneffort to properly understand and insure the risk. Some Hospitals purchase their steam and thus do not

have boilers of their own; however, most haveanywhere from 3 to 6 high pressure boilers.

Some Hospitals purchase Air Conditioning andRefrigeration; however most have very large HVAC

systems to cool and keep food and blood productsmaintained. Each Hospital with its affiliated facilities presents a

different exposure to the Underwriters.


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The important points we mentioned earlier aboutthe Machinery Breakdown Perils come into playwith the Underwriting Considerations for Both

Property Damage and Business Interruption.Underwriters will prepare insurance programs thatinclude coverage and services to meet acustomers needs.

Site surveys assist Machinery BreakdownUnderwriters to understand and align their coverage and services capacity appropriately



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What are the Property Damage Considerations? A review of the size, age and condition of machinery and

equipment

Are Maintenance procedures and testing performed per manufacturers recommendations?

Are personnel competent and experienced? Is there a clean and explainable history of equipment

failures?



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What are the Property Damage Considerations? Is any equipment obsolete ,prototype or one of a kind? Is the equipment all easily accessible for repairs? Does management have a preventative and predictive

approach toward maintenance, including expenditures? Does financial stability allow for the proper funding of

equipment repairs, testing and replacement as needed or required?



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What are the Business Interruption Considerations? Is there is a contingency plan in place for catastrophic

equipment failures?

Is there adequate standby power generation available torun OR, ER and all critical lighting? Is there a useable hook up for spare boilers and power

generation equipment?

Are there arrangements with nearby hospitals for caringfor patients or for moving patients to other facilities if needed?



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Machinery Breakdown Risk Engineers

Machinery BreakdownInsurance Carriers arerequired by mostStates to performJurisdictionalInspections of Boilersand Pressure Vessels.

.


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Machinery Breakdown Risk Engineers

The role of the MBRE: Evaluating equipment exposures through site surveys

Safety checks on Boilers and all critical equipment Check for double clamp on MRI machines Reviews maintenance and test records per manufacturing specs Consults and collaborates with key facility personnel and agent

Conducts loss Investigations when equipment failuresare reported to Chubb

Report and follow up on any Boiler & Pressure Vesselcode violations through written recommendations Provide web cast or on site training sessions for clients


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Machinery Breakdown Claims

Chubb has a dedicated Machinery Breakdown ClaimsUnit

The claims unit is staffed with seasoned professionalsthat are equipped to deal with Boiler & Equipment claims

Almost every claim is investigated by Chubbs MachineryBreakdown Risk Engineers who then report details to theMB Claims adjuster

Chubb utilizes Specialists in many fields to assist indetermining cause of loss and to assist them in handling

claims in a fair and accurate manner. Chubb MB Adjusters have experience and resources tohandle many different and sophisticated loss scenariosas you will see in the claims discussions


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Rev. May 2009

Don Zaprazny Unit Manager

[email protected] (#1) Voice

Christopher DouglasOutside Claim Specialist

[email protected] (#5) Voice636-744-1190 Voice-local

636-744-1162 Fax

Paul DieckmanOutside Claim [email protected] (#6) Voice570-268-1162 Voice-local

570-268-1164 Fax

MACHINERY BREAKDOWN CLAIM UNIT

George Kiger Outside Claim Specialist

[email protected] (#7) Voice678-407-2073 Voice-local

678-407-2106 Fax

CLAIM SERVICE CENTER FOR ALL FIRST REPORTS

Phone: 800-CLAIMS 0 (800-252-4670)Fax: 800-300-2538


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Loss Lessons from Chubb

Disclaimer:The following loss scenarios are not intended to beused to settle or evaluate any other claims that maybe similar in nature. Each and every claim isevaluated on its own circumstances.


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Machinery Breakdown ClaimsWhy do Machinery Breakdown losses occur? Lack of or Improper Maintenance Age of Equipment - Exhausted Useful Life of Machinery

Improper Use of Equipment Lack of Control or Safety Devices Failure of Safety Devices to Function Properly Poor Workmanship/Inferior Materials

Operator Error Poor Operating Environment External Forces


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Steam Explosion Peril

Examples of Steam Explosion:

Boiler Explosion Due to Safety Device Failure. Lowwater cut off devices do not detect low water or theystick causing water to flash to steam and cause severepressure explosion.

Burst Steam Pipe that might be caused by weld failure


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Electrical Injury / Arcing Peril

There is high potential for severity due to:

Large and ExpensiveEquipment & Materials

Extensive downtime for repairs

Specialized labor andovertime costs


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Electrical Injury / Arcing Peril

Examples that require repair or replacement :

Arcing in an Electrical Distribution Panel Caused by a

Loose Connection Winding Failure in an Electric Motor Due to Overheating

Caused by Insulation Breakdown A Single Phase Condition in a Transformer Resulting

From a Power Surge Distribution panel heats, melts or explodes due to surge

or insufficient insulation


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Other than Mechanical Breakdown (Abruptand Accidental Breakdown)

Some examples of Abrupt and AccidentalBreakdown of machines or apparatus:

Cracked piston in an Air Conditioning Compressor Boiler tubes burst due to a low water condition Crank shaft breaks or cracks on an Internal Combustion

Engine used to drive an Electric Stand by Generator dueto vibration or wear.


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Loss Lesson- Contractor on the Fritz

Loss Scenario and Details: An Air Conditioning System was damaged as a result of an outside

contractor that overfilled the glycol system (which prevents freezing of thecooling system)

The System did not dissipate the heat off of the compressor (500 ton). Dirtin the chill water system (tube bundle) caused additional heat recoveryproblems.

The Compressor failed. It experienced a rub of the impeller, causingsignificant damage on centrifugal compressor. It was repaired on site for acost of $80,000.

The main concern and problem with this loss was the competency of contractor as well as legitimate repair time/labor, parts and dispute over

who was responsible.

Loss Prevention: Doing business with reputable and responsible contractors.


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Loss Lesson No Longer a Patient!

Loss Scenario During the day shift, hospital personnel noted that one wing was getting

warmer. Maintenance staff was called to investigate. They found that thecondenser tube bundle for the system had ruptured.

Loss Details

This 80-ton centrifugal compressor system sustained failure of severaltubes that ruptured at the end where they bend. It is likely that the water hadnot been fully evacuated from the system during preparation for the winter,resulting in the remaining liquid freezing and rupturing the tube ends. Totalreplacement of the tube bundle, including labor, tear-down of system andinstallation of new tubes cost $60,000 for parts and labor and $22,000 of

extra expense costs for cleaning the system and overtime. Total loss$88,000. Loss Prevention Properly winterizing all systems by draining all pipes and tubes helps to

prevent failures resulting from ruptured tubes.


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Loss Lesson- Cooling System calls out Sick

Loss details The circuit board, which was part of the air conditioning units controller,

failed. The cost to repair the air conditioning unit was less than $5,000.However, to recreate the data and bring in new servers cost $40,000.

Loss Prevention While electrical testing of the air conditioning unit may have identified this

problem, having temperature alarms in the room that were connected toa central station would have allowed for identifying the problem andcorrecting it. Viable, usable back up tapes would have prevented the needto recreate all of the damaged data.


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Loss Lesson- Code Blue Boiler!

Loss Prevention Preheating the feed water prior to entry into the boiler or rearranging its

entry into another location may have prevented this failure. Stay bolts areused in boiler construction to provide strength to a particular area of highstress and are welded in place. Additionally, the stays have a "weep hole"

drilled through the center so that in the event that a crack or hole fromcorrosion develops, the water would leak out of the hole, become noticedand replaced


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MPL Example- Wasnt Transformed!

Loss Scenario & Details: A 2000 KVA rated transformer was experiencing improper load for a

long period of time (only 50% loaded). Due to improper changes inelectrical system, the transformer failed.

$113,000 for total replacement $50,000 in Extra Expense costs for a rental generator and fuel.

Loss Prevention: Annual oil & gas analysis testing and Doble Electric diagnostics

provide details of the overall health of the transformers. Proper load and usage is always recommended


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Furnace Explosion Damage at Hospital


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MRI Explosion


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Compressor Motor Stator Damage


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Steam Explosion at a Hospital in 2006

This Boiler explosion in 2006 at a hospital was due to the failure of asafety device. The boiler built up high pressure steam which resulted in asevere explosion.


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Steam Explosion at a Hospital in 2006

The low water cut off devices designed to shut the boiler down failed. Thisallowed the boiler to Continue to heat without water in the tubes. As aResult, explosion destroyed the boiler and portions of the building resultingin more than $2.5 million In damages.


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