PISA. Calculating new replacement values in property insurance

Transcription

1 PISA Calculating new replacement values in property insurance

2 Calculating new replacement values in property insurance is a highly complex task, but one which Swiss Re believes it can tackle effectively with the aid of a tool. Its name is PISA. PISA is short for Property Insurance Sums Insured Appraisal. The name of the tool was chosen deliberately the leaning tower of Pisa being a good metaphor for the current precarious state of sums insured calculation. PISA is a user-friendly PC-based application that can be employed in select industries. Its aim is to help primary insurers and policyholders determine risk-adjusted sums insured on the basis of accurate replacement values, and to protect them against the negative consequences of underinsurance.

3 The first step in insurance is to calculate the sum insured. But if this does not accurately reflect the actual value of the insured object, the implications can be serious for the insurer: high payments for claims set against inadequate income from premiums.

4 PISA uses broad-based, well-founded data material gleaned from across Europe. By linking information together, it is capable of calculating new replacement values in property insurance both efficiently and accurately.

5 PISA has been designed for use in the following industries: Combined heating /power stations Power stations (conventionally fired) Steelworks Breweries Refineries and petrochemical processing plants Paper producing plants Hospitals Hotels Administrative offices

6 Combined heat-and-power plants A typical feature of conventional power plants is that the basic process workflows are clearly structured and that there is very little difference between the technologies used in the various systems at different locations, even in an international comparison. Notwithstanding modern technical developments, plants generating heat and/or power from the combustion of fossil fuels are essentially based on the following simple principle: : generation of steam as thermal energy carrier (boiler plant) : conversion of thermal energy into kinetic energy of rotation (turbine) : conversion of kinetic energy of rotation into electric power (generator) The computation models for turbinegenerator units have been optimised for ratings between 40 and 150 MW (per TGU). Flue-gas cleaning: allowance is also made for the cost of flue-gas cleaning equipment. : dust separation (electrostatic precipitators) : desulphurisation (FGD) : nitrogen oxide removal (DeNOx) The valuation is performed separately for buildings and plant equipment. The results are the new replacement values for buildings and for individual groups of equipment, as follows: : buildings : heat and power generation : flue-gas cleaning : electrical systems : auxiliary systems Building: The computation models for building costs are based on calculated gross floor surface areas (m²), three types of building being distinguished: : machinery buildings : office buildings : auxiliary buildings (stores, workshops) Plant equipment: machinery and equipment are assessed separately for each installation (power plant unit). The computation models for boiler equipment distinguish four different types of conventional fuel: : brown coal (lignite) : hard coal : gas : oil

7 Breweries The valuation is performed separately for buildings and plant equipment. Buildings: the computation models for the cost of buildings are based on calculated gross floor surface areas (m²), three types of building being distinguished: : production buildings : office buildings : auxiliary building (stores, workshops) Equipment: machinery and equipment are assessed separately for each installation. The computation models have been optimised for outputs between and hl/a ( and bbl/a) per filling line. The results of the value appraisal are identified as new replacement values, separately for buildings and for individual groups of equipment: : buildings : tanks : yeast production : bottling : malting plant : auxiliary systems (eg central operating equipment)

8 Hotels The valuation is performed separately for buildings and interior fittings, the following categories of hotel being distinguished: : standard hotel: 2-star category, bed & breakfast : mid-scale hotel: 3-star category : first-class hotel: 4-star category : luxury hotel: 5-star category The computation models are based on calculated gross floor surface areas, a number of function areas being distinguished on the basis of their specific costs. Each of these function areas features a largely uniform cost structure, with major differences being possible in the methodology used by the computation models for the various function areas. : entertainment areas: theatres, music halls, casinos : parking areas: underground car parks : parking areas: parking lots, car ports Value-enhancing technical equipment: technical equipment that accounts for a major proportion of the new replacement value of the hotel is separately captured in the ratio of its percentage occupancy of the gross floor space: : HVAC equipment : fire alarm equipment : fire-fighting equipment The results of the value appraisal are the sums of the values of the individual function areas calculated on the basis of specific space costs. New replacement values for the building and interior fittings are separately identified in the results. Function areas: consists of entering the gross floor surface areas for the various function areas: : accommodation areas: guest rooms with vestibules and bathrooms : reception areas: foyer, lobby : service areas: breakfast rooms, lounges : mobility areas: corridors, stairwells : assembly areas: conference rooms, lecture theatres : fitness areas: swimming pool, sauna, gym : technical areas: heating, utilities (= boilers and supply systems?) : gastronomy areas: restaurant, bar : kitchen areas: cooking areas; cold storage facilities : management areas: offices : shopping areas: malls; personal services

9 Power plants A typical feature of conventional power plants is that the basic process workflows are clearly structured and that there is very little difference between the technologies used in the various systems at different locations, even in an international comparison. Notwithstanding modern technical developments, plants generating power from the combustion of fossil fuels are essentially based on the following simple principle: : generation of steam as thermal energy carrier (boiler plant) : conversion of thermal energy into kinetic energy of rotation (turbine) : conversion of kinetic energy of rotation into electric power (generator) The computation models for turbinegenerator units have been optimised for ratings between 100 and 700 MW (per TGU)TGU. Flue-gas cleaning: allowance is also made for the cost of flue-gas cleaning equipment. : dust separation (electrostatic precipitators) : desulphurisation (FGD) : nitrogen oxide removal (DeNOx) The valuation is performed separately for buildings and plant equipment. The results are the new replacement values for buildings and for individual groups of equipment, as follows: : buildings : power generation : flue-gas cleaning : electrical systems : auxiliary systems Building: The computation models for building costs are based on calculated gross floor surface areas (m²), three types of building being distinguished: : machinery buildings : office buildings : auxiliary buildings (stores, workshops) Plant equipment: machinery and equipment are assessed separately for each installation (power plant unit). The computation models for boiler equipment distinguish four different types of conventional fuel: : brown coal (lignite) : hard coal : gas : oil

10 Hospitals The valuation is performed separately for buildings, medical equipment and technical equipment, the following hospital areas being distinguished: : medical facilities : surgical operations : radiography : radiotherapy : physiotherapy/rehabilitation : laboratories : wards : management areas : supply and disposal areas For the purposes of valuation, hospitals must be considered as one-off structural units. Unlike in manufacturing operations, where certain process equipment is normally present in standard sequences and features characteristic dimensions, there are usually no process workflows in this classical sense in a hospital. Certain specialised areas, for example therapy or laboratories, may differ significantly from other areas in terms of size and facilities. Furthermore, some hospitals may specialise in certain fields, achieving a high degree of complexity and sophistication, whereas the same fields may possibly be of only minor importance, or not present at all, in other hospitals. For this reason, the computation models are based on calculated gross floor space, a number of function areas being distinguished on the basis of their specific costs. Each of these function areas features a largely uniform cost structure, with major differences being possible in the methodology used by the computation models for the various function areas. Function areas: data capture consists of entering the gross floor surface areas for the various function areas. Classification/quality standards: besides the distinction made between function areas, allowance is also made for the quality standard of a hospital as a further characteristic feature. This standard can be separately defined for each group of functions: : low eg neighbourhood medical centre : average eg district hospital : high eg specialised clinic Medical apparatus: to allow for the high contribution of expensive medical equipment to the new replacement value, special (high-cost) apparatus are separately counted, weighted, and taken into account in the calculation. The results of the value appraisal are the sums of the values of the individual function areas calculated on the basis of specific space costs. New replacement values for buildings and medical equipment are separately identified in the results.

11 Office buildings The valuation is performed separately for the building and interior fittings, the following categories of building being distinguished: : conventional office buildings of functional design : prestige office buildings : historical/protected office buildings Value-enhancing technical equipment: technical equipment that accounts for a major proportion of the new replacement value of the offices is separately captured in the ratio of its percentage occupancy of the gross floor space: : HVAC equipment : fire alarm equipment : fire-fighting equipment The results of the value appraisal are the sums of the values of the individual function areas calculated on the basis of specific space costs. New replacement values for the building and the interior fittings are separately identified in the results. The computation models are based on calculated gross floor space, a number of function areas being distinguished on the basis of their specific costs. Each of these function areas features a largely uniform cost structure, with major differences being possible in the methodology used by the computation models for the various function areas. Function areas: data capture consists of entering the gross floor surface areas for the various function areas: : work areas: offices, discussion rooms : reception areas: foyer, visitors waiting area : assembly areas: conference rooms, lecture theatres : mobility areas: corridors, stairwells : catering areas: canteen, tea rooms : kitchen areas: cooking areas; cold storage facilities : technical areas: heating compartments, utilities : IT areas: server compartments, computer centre : parking areas: underground car parks

12 Paper industry The valuation is performed separately for the individual parts of the plant by modelling the complete production process of an integral paper production facility. A typical feature of classical paper manufacture is that the basic process workflows are clearly structured, each individual step in the process in itself possibly representing a highly complex system comprising the most varied technologies and fabrication processes. The valuation is performed separately for buildings and technical equipment, distinguishing essentially between the systems and equipment required for the following products: Process-specific parameters (eg the thickness of different types of paper) and different process technologies (eg sulphation processes in the manufacture of cellulose) are separately captured and calculated in separate modules. The computation models are based on calculated annual capacities, each item of plant (eg each paper machine) being separately assessed. The results of the value appraisal are the sums of the values of the individual parts of the plant. The new replacement values of individual groups of equipment are separately identified in the results. : newsprint : super-calandered (SC) papers : light-weight coated (LWC) papers : printings and writings, coated and uncoated : coated paperboard : testliner (fluting paper with high recovered-paper content, up to 100 %) : kraftliner (fluting paper with low recovered-paper content, max. 30 %) : sanitary and household papers Equipment: the valuation for the equipment and machines is performed taking into account the various pulp manufacturing processes and separately for the different types of paper for various end products and, within each type of paper, separately for the individual production processes.

13 Refineries and petrochemical processing The valuation for refineries and petrochemical processing is performed separately for the individual parts of the plant by modelling the complete production process of an integral refinery facility. A refinery is a combination of production equipment that can essentially be broken down into the following physical process steps: : separation : conversion : purification : mixing A typical feature of classical petrochemical processing is that the basic process workflows are structured in a network of highly complex systems, the various steps in the processes being naturally clearly structured in themselves. Crude oil processing plants are essentially based on the following process steps: Distillation: Thermal separation into crude oil fractions such as naphtha, diesel, fuel oil: : atmospheric distillation (CDU) : vacuum distillation (VDU) Hydrotreating: removal of sulphur compounds, unsaturated hydrocarbons and other trace elements by hydrogenation with the aid of catalysts: : gasoline hydrogenation : vacuum gas oil hydrogenation (VGO) : catalytic extraction (Merox process) Reforming, isomerization, alkylation: conversion of light hydrocarbon fractions into higher grade products, eg to increase the octane number in gasoline: : catalytic reforming (gasoline reformer, CCR platforming) : isomerisation (C5/C6 isomerisation) : alkylation Conversion: Cracking heavy hydrocarbons with the aid of catalysts or thermally with steam: : hydro cracking (HC, Isomax) : fluid catalytic cracking (FCC) : thermal cracking (steam, coker, visbreaker) Miscellaneous procedures: for upgrading the product properties or increasing plant throughput : De-asphalting: extraction of asphalts and metals from heavy residue, for example, for the production of bitumen (solvent de-asphalting) : Oxidation: changing the quality of bitumen grades by oxidation : Dehydrating: conversion of saturated hydrocarbons into unsaturated hydrocarbons : Separation and transformation of aromatic hydrocarbons extraction separation with the aid of solvents adsorption separation with the aid of molecular sieves catalytic separation isomerization or alkylation in order to obtain higher grade products : Gas post-treatment (gas plant): treatment of liquids and residual gases that occur in the plant (distillation or absorptive separation of gases) Nelson Complexity Index (NCI): The computation models are essentially based on the Nelson Complexity Index (NCI) approach. The valuation for the equipment and machines is based on the crude oil processing capacity as measured by the Nelson Complexity Index, with different computation models being used, depending on the depth of crude oil processing (secondary conversion of oil products). All auxiliary systems needed for the safe and reliable operation of a largescale technical installation are taken into account and are integrated into the computation models. Tank farms and auxiliary systems are allowed for separately. The results of the value appraisal are identified as new replacement values, separately for process equipment and for auxiliary systems.

14 Steel industry The results of the value appraisal are the sums of the values of the individual parts of the plant. The new replacement values of individual groups of equipment are separately identified in the results. The valuation is performed separately for the individual parts of the plant by modelling the complete production process of an integral steel manufacture facility. A typical feature of classical steel manufacture is that the basic process workflows are clearly structured, each individual step in the process possibly representing in itself a highly complex system comprising the most varied technologies and fabrication processes. Notwithstanding modern technical developments, steel manufacturing plants are essentially based on the following process steps: : coke plant : sintering plant : iron production : steel production : foundry : rolling mills : finishing processes Equipment: machinery and equipment are assessed separately for each part of the plant and, within each part of the plant, separately for each production process. Process-specific parameters (eg the thickness of rolled products) and the various process technologies in use (eg out-of-date alongside ultra-modern technologies) are individually captured and calculated in separate modules. The computation models are based on calculated annual capacities, each item of plant (eg each individual furnace) being separately assessed.

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