CECR – Specific of covers and experience made
IMIA Working Group Paper 72
IMIA Conference 2011 – Amsterdam
Thomas Gebert (Zurich Insurance) ChairmanIvan Blanco (XL)Eric Brault (AXA Corporate Solutions)Brendan Dunlea (Zurich Insurance)John Forder (Willis)Blas Gomez (Seguros Atlas)Kun Hong Ho (Scor)Federico Pereira (Hannover Re)Thierry Portevin (Allianz) Gero Stenzel (Partner Re) David Walters (ACE) Volkan Babür (Mapfre) IMIA EC Sponsor
Working Group Contributors
Working Group Contributors
Introduction
InsurableObjects
Scope of Cover
UnderwritingConsiderations
Summary
Overview
Chile EarthquakeFeb. 20108.8 moment magnitude scaleInsured Damages: 8 bn USD
Introduction
500 km
Introduction
Queensland Floods Dec. 2010 to Jan. 2011Insured Losses: 5 bn USD
Gladstone
Introduction
Japan EarthquakeMarch 20119.0 moment magnitude scaleInsured Damages: 30 bn USD
Introduction
Introduction
Introduction
Big Lake
Omaha
Introduction
June 2011
June 2010
NS
RailroadsRoads
Insurable Objects
Harbours Dry docks Canal systems
Insurable Objects
Runways, Aprons of Airports
Insurable Objects
Overhead linesTransmission & distribution lines
DamsWeirsPipelines (conveying non- combustible substances)Sewer systems Irrigation systemsWater reservoirs
Insurable Objects
Customers
• Government /state entities• JV / PPP• Private Parties
Scope of Cover
Engineering• technical know how• contacts (construction period)• risk management • tailor made solutions
Why Engineering?
Property (fire)• dominant risk is fire • standard solutions
Scope of Cover
• Annually renewable
• All risk/named perils wordings• Impact of land borne or waterborne vehicles or aircraft or
articles dropped there from• Earthquake, volcano, tsunami• Storm • Flood or inundation• Subsidence, landslide, rockslide or any other earth
movement• Frost, avalanche, ice, snow• Vandalism by individual persons• Fire, lightning, explosion
Scope of Cover
• Extensions• Debris removal• Expediting costs • Machinery breakdown• Strike, riot and civil commotion• Terrorism • Consequential loss (separate BI section)
Scope of Cover
Exclusions• Loss or damage caused by or aggravated by latent or
inherent defects• Mechanical or electrical breakdown of machinery or
electronic installations • Wear and tear, corrosion, erosion, normal settlements• Wilful acts or negligence• War• Nuclear risks
Scope of Cover
Guide to typical
exposures
Bridges
Dam
s
Harbours
Pipelines
Roads
Railw
ays
Runw
ays
Transmissi
on lines
Tunnels
Sewer &
W
ater
Waterw
ays
EQ x x x x x x x x x
Tsunami x x x x x x x x
Flood x x x x x x x x x x
Frost, ice x x x
Fire x x
Explosion x x
Landslide / rock fall x x x x x x x
Aircraft impact x x x x x
Vessel impact x x x x
Motor vehicle impact x x x
Sabotage / burglary x x x x x x
Collapse x x x x
Underwriting Considerations
Guide to typical
exposures
Bridges
Dam
s
Harbours
Pipelines
Roads
Railw
ays
Runw
ays
Transmissi
on lines
Tunnels
Sewer &
W
ater
Waterw
ays
EQ x x x x x x x x x
Tsunami x x x x x x x x
Flood x x x x x x x x x x
Frost, ice x x x
Fire x x
Explosion x x
Landslide / rock fall x x x x x x x
Aircraft impact x x x x x
Vessel impact x x x x
Motor vehicle impact x x x
Sabotage / burglary x x x x x x
Collapse x x x x
Underwriting Considerations
Sums Insured
• New structures• Project sum insured
• Existing structures• New replacement value
Underwriting Considerations
• Type of risk (single/multi location)• Value of largest structures• Geographical and topographical location • Exposures • Construction • Inspection reports • Local standards / Maintenance schedule • Previous damages• Operating personnel
Underwriting Considerations
Underwriting Considerations
• Rail Tracks: 50,000 km • Intermodal facilities: 31• Locomotives: 6,600• Cars: 200,000• Bridges: 13,100• Tunnels: 87• Highway-railroad crossings: 26,000• Rail yards: 120
Example 1: Railroad multi-location Operational
Example 1: Railroad multi-locations operational
• 400 locations with values of > 20 m USD• BI• Choke points• CBI• Increased cost of working• Sub limits• IAR basis• Non proportional placements• Aggregates for NatCat• Deductibles• Risk management
Underwriting Considerations
ReactiveMaintenance Periodically Condition Based
Preventive Maintenance
Underwriting Considerations
Guide to typical
exposures
Bridges
Dam
s
Harbours
Pipelines
Roads
Railw
ays
Runw
ays
Transmissi
on lines
Tunnels
Sewer &
W
ater
Waterw
ays
EQ x x x x x x x x x
Tsunami x x x x x x x x
Flood x x x x x x x x x x
Frost, ice x x x
Fire x x
Explosion x x
Landslide / rock fall x x x x x x x
Aircraft impact x x x x x
Vessel impact x x x x
Motor vehicle impact x x x
Sabotage / burglary x x x x x x
Collapse x x x x
Underwriting Considerations
Underwriting Considerations
Underwriting Considerations
Example 1: Railroad multi-locations operational
Underwriting Considerations
Example 1: Railroad multi-locations operational
Underwriting Considerations
Underwriting Considerations
Example 2: Bridges single location operational
Underwriting Considerations
New Tunnel
Existing Road
Example 3: Road project insurance with CECR/BI extension
Guide to typical
exposures
Bridges
Dam
s
Harbours
Pipelines
Roads
Railw
ays
Runw
ays
Transmissi
on lines
Tunnels
Sewer &
W
ater
Waterw
ays
EQ x x x x x x x x x
Tsunami x x x x x x x x
Flood x x x x x x x x x x
Frost, ice x x x
Fire x x
Explosion x x
Landslide / rock fall x x x x x x x
Aircraft impact x x x x x
Vessel impact x x x x
Motor vehicle impact x x x
Sabotage / burglary x x x x x x
Collapse x x x x
Underwriting Considerations
Underwriting Considerations
New Tunnel
Existing RoadRock fall
Example 3: Road project insurance with CECR/BI extension
Underwriting Considerations
New Tunnel
Existing Road
Example 3: Road project insurance with CECR/BI extension
Underwriting Considerations
Final Contract Value
Visit/Ext./Guarantee Maintenance Cover
CECR/BI
Transport Construction
Provisionalhandover
CAR/DSU
Second year
$
Operation
Cargo & Inland transit
Procurement
First year
Design
Example 4: Motorway operational/project policy
Loss
Underwriting Considerations
•
Example 4: Motorway operational/project policy
Underwriting Considerations
Example 4: Motorway operational/project policy
Underwriting Considerations
Ageing infrastructure
Summary
Comprehensive coverComplex risksExtensions (MB, IAR, BI)High exposure of geographical spread of riskNatCat aggregation importantSection/loss limitUnderwriting information Detailed knowledge about the account necessary CECR can be a section of a project policy
INTERNAL USE ONLY 43CECR
Thank you
• Type of risk (single/multi location)• Value of largest structures• Geographical and topographical location • Exposures • Construction • Inspection reports • Local standards / Maintenance schedule • Previous damages• Operating personnel
Underwriting Considerations