renewable energy exposures, claims and claim services

WORKING TOGETHER:

the Crawford Difference

Renewable EnergyExposures, Claims and Claim

Services

Derek Patterson,

Crawford & Company Middle East

WORKING TOGETHER: the Crawford Difference

AGENDA

1. Crawford and Company

2. Claims Process

3. World Trends

4. Exposures/ Risks Sharing

5. Risks Linked to Renewables

6. Focus on Wind Energy

7. Claims Types

8. Challenges in dealing with Claims

9. Crawford Brochure

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WORKING TOGETHER: the Crawford Difference3

1. Crawford & Company Inc, Atlanta

• Crawford & Company – 70 countries – 8,000 staff – US$1.2 billion – Property & Casualty division; Crawford & Company– Financial Services; The Garden City Group– Healthcare + TPA Administration; Broadspire

• Property & Casualty Division– America’s: USA, Canada, Central and Latin America– EMEA AP: Asia, CEMEA, UK

• CEMEA– Middle East : Part of CEMEA– Derek Patterson, Regional MD - Middel East– Renewable Energy Practice Leader– Mark Vos, Head of Global Technical Services CEMEA– David Dimelow, Global Technical Services UK


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2. Claims Process

Important to start on the right foot - set the tone

for the way the claim will proceed

Has the policy been triggered?

Plan of action

Communicate loss to insurers

Prove your claim!

What is the desired outcome?

Collection of funds

Are the clients rights being protected?

Notification and Acknowledgement

Coverage

Claim Strategy

Insurer Contact

Information Gathering and Analysis

Negotiation

Settlement

Subrogation Management


Insurance Claim Timeline

Claim Closed

Date Of Loss -

Loss Notification

Loss Adjuster Visit

RCA

Adjusters Preliminary Report is issued to

(Re)Insurers

Initial Coverage Analysis

Interim Report issued recommending Advance

Partial Claim Submission

Settlement NegotiationsFinal Report

Final Claim Submission

Final Coverage Analysis

Sign Proof of Loss

Collect and transfer funds

Insurers Agreement


Claim ProceduresPost incident actions

• Take all reasonable steps to prevent further damage. Acting at all times as a prudent uninsured.

• Prior to commencement of dismantling/repair work, take photographs of the incident scene and the damaged equipment/parts– use of video footage is becoming more common

• Preserve damaged equipment/parts for further inspection by the appointed Loss Adjuster / External Experts– protect from the elements– Designated ‘Lay Down Area’

• Notification to third parties holding them responsible for loss in order to preserve Insurer’s rights of recovery.



• Investigate the loss & identify cause(s)– Root cause analysis essential to the adjustment of the claim essential to prevent recurrence– secure documents, drawings, specifications etc.– obtain witness statements

• When a Loss Adjuster is appointed, agree expenditure and actions in advance with him– need to establish a primary contact for communications with the

Loss Adjuster


Post Incident ActionsThe importance of Cause and Origin

Underwriting– Statistics– Loss prevention

Subrogation• Not employees

• Equipment vendors

• Contractors

World class experts in relevant specializations may be

employed to determine cause.


Claim ProceduresPost incident actions - PD Assessment Protocol

• Inspection• Determination of most economic repair options• Options discussed with BI team for their approval• Agreement on methodology of testing and interpretation

of results• Agreement with Insured on proposed repair-replacement • Discussion with BI team on economics of expediting;

overtime, air-freighting, domestic or import procurement• Review all tender bids and appraise final choice• Preparation of critical path schedule for repair stages



• Effect temporary / emergency repairs required to resume operations.

• Obtain witness statements as soon as possible while memories are clear.

• If applicable restore fire protection to site.



• Open a claim file Keep duplicates of all information given to other parties (loss

adjusters, brokers, contractors, licensors, suppliers, vendors, consultants etc.)

Document everything.

• All expenses relating to the loss should be carefully recorded via allocated cost-center including:– repair and replacement costs

– labor & supervision (time sheets)

– expenses incurred to mitigate the loss (labor, emergency response, equipment etc.)



• Third partly liability claims:– Do not admit to or assume responsibility / fault for the injury or

damage (even verbally)– Cooperate fully with legal authorities– Do not guarantee payment for any damages or injuries– Open a claim file in which duplicates of all relevant

documentation should be held– After initial contact, limit communications with any third party

claimants– Any communication received from a third party should be

forwarded without reply to Risk Management.



• Claims progress reporting• Preservation of recovery opportunities

– protect insurers rights of recovery against third parties – do not prejudice possible subrogation actions

– disposal of scrap and debris, salvage etc. to be agreed with Loss Adjuster


3. World Energy Consumption

• World Consumption is 15 Tera Watt (TW)


Energy Resources

• Energy resources, which can be tapped.


4. Exposures

• 1: Profitability– Governments or Private Energy Suppliers– Subsidies, Profit & Loss < -- > CO2 Consumption

• 1kWh = 0,7kg CO2 = 110 Trees CO2 Annual Consumption

• 2: Feasibility of Energy Resource– Do we have the right location.– Which concession do need to consider.

• 3: Reliability of Technical Operation– Continued demand pushes ‘continued prototyping’

• 4: Life Cycle of Investment– Replacement versus Technology


4.1 Exposures & Risk Sharing

• Financial Risk Sharing– Banks (investment + cashflow protection to investor) – ALOP/

DSU– Public-Private Partnership (PPS); subsidy – ALOP/ DSU

• Operational Risk Sharing– Availability / Performance Risk [energy source and generator

(BI)]– Investment protection (PD, MB, BI) – Environmental regulation (Liability) – Public/ community (Liability)

• Technical Risk Sharing– Technical Design and Maintenance (PD + MB)– Proto-typing and serial risk (Warranty, Guarantee)– Investment and design (CAR, EAR, PD+MB)


5. Renewable Energy Hazards

• Bio Energy– Bio-gas (methane gas-mix /explosion & sulphur corrosion)– Bio-fuels; pulp / algae / Canola seed oil (agricultural risks) – Bio-energy research: living organism & light (natural risks)

• Hydro Energy– Hydro power: Rainwater, rivers and glacier rivers (climate/

natural/ engineering)– Tidal power: Efficiency & Location (natural/ engineering)

• Geo Energy– Thermal pumps: small scale applications (natural/ engineering)– Volcanic areas larger potential and application like Iceland


6. Renewable Energy Projections - Wind

• Wind Energy – Subsidies Europe– The costprice of wind energy (net cost) at 1.760 “ full load hours"

is 11 cent per kWh for a period of 15 years of projects awarded in 2008. The subsidy balances the right value vs the electricity price. At 3,330 (full load hours) €1,7 cent subsidy/ kWh.

– At 1,760 hrs projects receives a subsidy of: "1.760 * (11,0-7,8) * project capacity in kW". A turbine of say 3 MW (3.000 kW) received in 2008: (maximum) 1,760 * 0,032 * 3.000 = € 168.960.

• New Zealand, Australia, Aruba,Turkey = No subsidy


0.15 MW

10 m,26 ft

AltamontRegion

6.1 Wind Industry Growth Trends

• Larger multi-MW turbines• Demand for new innovative technologies• Led by European investment• Offshore & low wind regime focus in U.S.

Vestas V112 3 MW 2009

Blade Tip Max 200 m/s=720km/h


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• Energy resources, which can be tapped.


Typical Wind Turbine Construction

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Rotor –gear box – control panel – contactor panel - generator setRotor –gear box – control panel – contactor panel - generator set

Rotor –gear box – control panel – contactor panel - generator set


7. Most Common Types Of Claims

Erection (EAR/CAR)• Transport – Damage to blades and nacelle / turbine• Handling – Damage during erection • Natural Perils• Fire damage during commissioning• Design – monopile connection to transition piece

Operational (PD / MB)• Weather – lightning strikes / storm / hail (solar arrays)• Fire – malfunction and maintenance activity• Machinery Breakdown – braking system / Generator shorting /

- control panel electronics / mechanical


Typical Fire Damage

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Typical Damage

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7. Most Common Type of Claims

Financial (BI) • Triggered by Material Damage or Machinery Breakdown• Loss of Capacity / Revenue• Time deductible / Waiting period

Liability (Public Liability / Product Liability / Prof. Indemnity• Claims against wind turbine manufacturers & wind farm operators• Excessive noise, damage to property, economic loss, emotional

distress• Injunctive relief, costs and punitive damage• Contravention of enviromental legislation• PL claims for non-performance• PI claims for design failures (monopile)

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Cost Structure

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Claim Challenges

• The claim process remains the same• Challenges in respect of logistics / costs related thereto• Logistics / costs for marine offshore spread US$ 100k

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9. Crawford Renewable Energy Practice


Crawford - Global Technical Services

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renewable energy exposures, claims and claim services

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