4th Reunion Engineering Insurance Roundtable 4-й Круглый cтол Реюнион по техническому страхованию

Transcription

1 4th Reunion Engineering Insurance Roundtable 4-й Круглый cтол Реюнион по техническому страхованию June 2-4, 2014, St.Petersburg, Russia 2-4 июня, 2014, Санкт-Петербург, Россия

2 Content Introduction 2 Participants list 4 Chapter 1. Overview of losses in Chapter 2. Risks Evaluation 44 Chapter 3. Risk Definition 74 Chapter 4. PML Definition 84 Chapter 5. Contractor s Liability Insurance 98 Chapter 6. Maintenance Covers 118 Chapter 7. Civil Engineering Completed Risks 130 Chapter 8. Tunnel s construction insurance 134 Chapter 9. Standard CAR policy wording of Munich Re its application in Russia 152 Chapter 10. CAR/EAR Endorsements application issues 174 Chapter 11. Delay in Start-up. Exposures and Risk Assessment 192 Analytics й Круглый cтол Реюнион по техническому страхованию, 2-4 июня, 2014, Санкт-Петербург, Россия 4th Reunion Engineering Insurance Roundtable, June 2-4, 2014, St.Petersburg, Russia

3 Ladies and Gentlemen, We are delighted to present the essential materials of the 4th Reunion Engineering Insurance Roundtable, organised and hosted by Reunion AG in June 2014 in St.Petersburg, Russia. This time we focused on various topics related to underwriting of engineering risks. While planning the roundtable discussions, we took into consideration our previous experience of running this event. The unique group of participants, who between them represented most of the main international reinsurers and the biggest players in the Russian insurance market including the national reinsurers, offered a very high level of experience and knowledge, especially in the field of construction and erection insurance. On the second day of the event participants took a break from the indoor discussion format and visited a construction site in St. Petersburg subway tunnel in St.Petersburg. We would like to pay special thanks to Gefest Insurance Co. for helping us to organize this visit. We would also like to thank all the participants who presented, which also prompted interesting discussions and debate on each of discussion subjects. Acting as an insurance and reinsurance broker from Zug, Switzerland with subsidiary offices in Moscow, Russia and Kyiv, Ukraine, Reunion AG maintains a constant dialog with Russian, and CIS insurers as well as international reinsurers. We believe regular meetings between professionals in this sector are useful for all parties. This roundtable is our small contribution to this process. We hope this publication will be interesting to you and we would appreciate any feedback. You can post your comments and proposals on our website This publication may also be downloaded from our website. Best regards, Igor Prandetsky, CEO Reunion AG 4th Reunion Engineering Insurance Roundtable, June 2-4, 2014, St.Petersburg, Russia 2

4 Participants list Stanislav Moiseev, Technical Lines Manager, ACE Insurance Company, Moscow, Russia Jean-Francois Rossetto, Senior Underwriter Civil Construction, ACE European Group Ltd, London, United Kingdom Andrey Emelianov, Head of Engineering Division, Senior Underwriter, AlfaStrakhovanie JSC, Moscow, Russia Denis Nikolaytsev, Senior Underwriter Engineering, Allianz Global Corporate & Specialty JSC, Moscow, Russia Alex Stähler, Senior Underwriter Engineering, Allianz Global Corporate & Specialty (AGCS), Munich, Germany Peter Tailby, Senior Underwriter Engineering, Arab Insurance Group, Manama, Kingdom of Bahrain Andrey Tikhonov, Head of Underwriting Department, British Insurance House Ltd, Moscow, Russia Georgy Tairov, First Deputy Director of the North-West Branch, British Insurance House Ltd, Saint Petersburg, Russia Evgeny Malachinsky, General Director, Cunningham Lindsey Russia JSC, Moscow, Russia Daniil Cherepanov, Deputy Head of Property Claims Department, Cunningham Lindsey Russia JSC, Moscow, Russia Ulrich Mann, Managing Director, Cunningham Lindsey Zorn Gmbh, Wülfrath, Germany Ilya Averin, Head of Engineering Insurance Department, Euro-Policy LLC, Moscow, Russia Vladimir Karyukin, First Deputy General Director, GEFEST IJSC, Moscow, Russia Sergey Moskovskikh, Head of Department of Technical Risks, GEFEST IJSC, Moscow, Russia Vladimir Chubukov, First Deputy General Director, GEFEST IJSC, Moscow, Russia Tomasz Zgadzaj, Underwriter, Hannover Rück SE, Hannover, Germany Radiy Suleymanov, Director of Engineering Underwriting Department, Underwriting Division, Corporate Insurance, Ingosstrakh OJSIC, Moscow, Russia Rinat Ramazanov, Deputy General Director, Head of Risk Survey Department, ISES LLC (RusSurvey ), Moscow, Russia Pavel Shaptsev, Deputy General Director, Head of International Programs Department, ISLAB LLC (RusSurvey ) in association with Crawford & Company, Moscow, Russia Hong-Sub Choi, Chief Representative, Korean Reinsurance Company, London, United Kingdom Jeong Wan Oh, Assistant Manager, Korean Reinsurance Company, London, United Kingdom Alexander Potitov, Deputy CEO, Chief Underwriting Officer (CUO), «Liberty Insurance» OJSC, Saint Petersburg, Russia Pavel Maximov, Head of Property Risks Department, Moscow Re OJSIRC, Moscow, Russia Stefan Saur, Engineering Underwriter, Munich Re, Munich, Germany Mathias Warlich, Head of Property Facultative Fire and Engineering Underwriting, CEE, Nord Countries, South East Europe, Munich Re, Munich, Germany Michał Żelaśkiewicz, Product Manager, Property and Engineering, Polish Re, Warsaw, Poland Magdalena Czaja, Team Manager, Marine Underwriter, Chief Area Manager: Russia, Polish Re, Warsaw, Poland Mikhail Ermishkin, Head of Department Support to Major Risks, Pomosch Insurance Company Ltd, Saint Petersburg/Moscow, Russia Dmitry Fokichev, Director of Reinsurance Department, Pomosch Insurance Company Ltd, Saint Petersburg/ Moscow, Russia Vladimir Nenashev, Head of Reinsurance Department, Insurance Company RESO-Garantia JSC, Moscow, Russia Igor Prandetsky, CEO, Reunion AG, Zug, Switzerland 4th Reunion Engineering Insurance Roundtable, June 2-4, 2014, St.Petersburg, Russia 3

5 Irina Volochkovskaia-Guérin, Director, Reinsurance Placements, Reunion AG, Zug, Switzerland Oksana Eckert, Deputy Director,Reinsurance Placements, Reunion AG, Zug, Switzerland Olena Wespi, Associate Manager, Reinsurance Placements, Reunion AG, Zug, Switzerland Alexander Drugov, Head of Property and Liability Insurance Division, Reunion Insurance Broker LLC, Moscow, Russia Konstantin Artamonov, Deputy CEO, Reunion Insurance Broker LLC, Moscow, Russia Roksana Bobrik, Head of Reinsurance Division, Reunion Insurance Broker LLC, Moscow, Russia Yuriy Yaniuk, CEO, Reunion Ukraine LLC, Kyiv, Ukraine Igor Ryzhkin, Deputy Director of Property and Technical Risks Insurance Department, Rosgosstrakh Ltd, Moscow, Russia Olga Semenova, Reinsurance Department Chief Specialist, Rosgosstrakh Ltd, Moscow, Russia Maria Morozova, Business Development and Client Management, Russian Reinsurance Company, Moscow JSC, Russia Tim Chapman, Construction Manager, SCOR Global P&C, Paris, France Manuel Bezjak, Senior Underwriter, Global Engineering, Swiss Re Europe S.A., Munich, Germany Martina Pöschl, Underwriter, Global Engineering, Swiss Re Europe S.A., Munich, Germany Thomas Raetzo, Head Global EN Europe North & East, Africa & Analytics, Swiss Re Europe S.A., Zürich, Switzerland Steven Norcliffe, Senior Vice President, Construction and Power, Torus Insurance (UK), London, United Kingdom Stanislav Sizarev, Head of Sales Division, Transneft Insurance Company CJSC, Moscow, Russia Svetlana Chepeleva, Deputy CEO, Chief Underwriting Officer, Unity Re Ltd, Moscow, Russia Petko Koev, Underwriter, VIG Re, Prague, Czech Republic Eduard German, Head of Engineering Lines, Zurich Insurance Company Ltd, Moscow, Russia 4th Reunion Engineering Insurance Roundtable, June 2-4, 2014, St.Petersburg, Russia 4

6 ACE Insurance Company, Moscow, Russia Stanislav Moiseev Education: Moscow State Pedagogical University Experience: 14 years in P&C insurance and reinsurance (Allianz, AIG, Sogaz, AlfaStrakhovanie) Position: Technical Lines Manager ACE European Group Ltd, London, United Kingdom Jean-Francois Rossetto Education: Experience: Position: Master of Science in Civil Engineering ESTP Paris 25 years experience in Underwriting International Property and Engineering Accounts Senior Underwriter Civil construction AlfaStrakhovanie JSC, Moscow, Russia Andrey Emelianov Education: Experience: Position: Moscow State Construction University, Moscow State University of Economics, Statistics and Informatics, Allianz trainings, MBA (The Russian Presidential Academy of National Economy and Public Administration), strategic management Deutsche Management Akademie, Niedersachsen 14 years Head of Engineering Division, Senior Underwriter Allianz Global Corporate & Specialty JSC, Moscow, Russia Denis Nikolaytsev Education: Experience: Position: Donbass State Engineering Academy Kramatorsk, Ukraine, Academy of National Economy under the Government of the Russian Federation, Moscow, Russia Mechanical Engineer, Reinsurer and Underwriter of Engineering Risks Senior Underwriter Engineering Allianz Global Corporate & Specialty (AGCS), Munich, Germany Alex Stähler Education: Experience: Position: Industrial Engineer 16 years of Underwriting, mainly Power & Utilities EAR /ALoP; MB / BI; mostly linked to German technologies in global placements Senior Underwriter Engineering Arab Insurance Group, Manama, Kingdom of Bahrain Peter Tailby Education: Experience: Position: Mechanical Engineering Degree 33 years Property & Engineering Insurance and Reinsurance in Europe, USA and the Middle East Senior Underwriter Engineering British Insurance House Ltd, Moscow, Russia Andrey Tikhonov Education: Experience: Position: Financial Academy under the Government of Russian Federation, Insurance Institute Over 10 years in insurance Head of Underwriting Department 4th Reunion Engineering Insurance Roundtable, June 2-4, 2014, St.Petersburg, Russia 5

7 British Insurance House Ltd, Saint Petersburg, Russia Georgy Tairov Education: Experience: Position: Higher administrative school of the administration of St. Petersburg More than 10 years First Deputy Director of the North-West branch Cunningham Lindsey Russia JSC, Moscow, Russia Evgeny Malachinsky Education: Experience: Position: Licenced Deck Officer (graduated from Novorossiysk Marine Academy) Since 1997 with Cunningham Lindsey Russia as a marine surveyor, Loss Adjuster on marine/nonmarine claims, since 2008 Executive Director, since 2012 General Director General Director Daniil Cherepanov Education: Shadrinsk State Pedagogical Institute, Faculty of Foreign Languages, Specialty Teacher of English and French Experience: 3 years interpreter experience at Uralmash Heavy Machinery Plant; 6 years experience as a Fleet Manager of Nefteyugansk United Airline Transportation Company in United Nations Missions, since 2012 Loss Adjuster in Cunningham Lindsey Russia Position: Deputy Head of Property Claims Department Cunningham Lindsey Zorn GmbH, Wülfrath, Germany Ulrich Mann Education: Experience: Position: Civil Engineer, MSc, Phd 9 years industry, 19 years expert and adjuster Managing Director Euro-Policy LLC, Moscow, Russia Ilya Averin Education: Experience: Position: Moscow State University of Economics, Statistics and Informatics in/on MBA, Academy of National Economy under the RF Government OJSC «ROSNO», Atomstroyexport, Stroytransgaz Head of Engineering Insurance Department GEFEST IJSC, Moscow, Russia Vladimir Karyukin Education: Experience: Position: Sergey Moskovskikh Education: Experience: Position: Vladimir Chubukov Education: Experience: Position: Moscow State University of Railway Engineering, Civil Engineer Over 11 years insurance experience First Deputy General Director Construction Engineering (Diploma of Moscow State Construction University) 8 years in civil engineering, 9 years in insurance of contraction and assembly risks Head of Department of Technical Risks Moscow Institute of Transport Engineers, Department of Bridges and Tunnels, Russian Academy of Business, specialty Finance and Credit, specialization Finance and Insurance 20 years for insurance First Deputy General Director 4th Reunion Engineering Insurance Roundtable, June 2-4, 2014, St.Petersburg, Russia 6

8 Hannover Rück SE, Hannover, Germany Tomasz Zgadzaj Education: Experience: Position: Civil Engineer (1997, TU Berlin) 20 years construction/design, 4 years reinsurance Underwriter Ingosstrakh OJSIC, Moscow, Russia Radiy Suleymanov Education: Experience: Position: Moscow Engineering Physics Institute (National Research Nuclear University), Experimental Nuclear Physics Moscow State Industrial University, Economics & Management in Engineering Industry 21 years in Engineering insurance/underwriting with Ingosstrakh Insurance Co. Director of Engineering Underwriting Department, Underwriting Division, Corporate Insurance ISES LLC (RusSurvey ), Moscow,Russia Rinat Ramazanov Education: Experience: Position: 1998 Moscow State University of Environmental Engineering Center of Expertise of industrial Safety, created on the basis of production and technical enterprise «Tsentroenergochermet» Ministry of Ferrous Metallurgy of the USSR, 5 years in Engineering Center of OJSIC Ingosstrakh, 2011 present time ISES LLC (RusSurvey ) Deputy General Director, Head of Risk Survey Department ISLAB LLC (RusSurvey ) in association with Crawford & Company, Moscow, Russia Pavel Shaptsev Education: Experience: Position: 1996 Plekhanov Russian Economic Academy, Griboedov International Institute of Law and Economics Оver 18 years of experience in insurance and in claims department. Companies: ISLAB LLC (RusSurvey ) in association with Crawford & Company, Zurich Insurance Company (Russia) Ltd., Westrosso Insurance Company Deputy General Director, Head of International Programs Department Korean Reinsurance Company, London, United Kingdom Hong-Sub Choi Education: Experience: Position: Jeong Wan Oh Education: Experience: Position: Master Degree 15 years Chief Representative Master Degree 6 years Assistant Manager Liberty Insurance Company OJSC, Saint Petersburg, Russia Alexander Potitov Education: Experience: Position: Radio and Electronic Engineer Since 1993 in property/casualty underwriting Deputy CEO, Chief Underwriting Officer Moscow Re OJSIRC, Moscow, Russia Pavel Maximov Education: Experience: Position: All-Russian Distance Institute of Finance and Economics, Specialty Finance and Credit 20 years in insurance and reinsurance Head of Property Risks Department 4th Reunion Engineering Insurance Roundtable, June 2-4, 2014, St.Petersburg, Russia 7

9 Munich Re, Munich, Germany Stefan Saur Education: Experience: Position: Mathias Warlich Education: Experience: Position: Civil Engineer 5 years Engineering Underwriting Engineering Underwriter University Degree Business Administration 13 years international insurance, 15 years reinsurance underwriting Head of Property Facultative Fire and Engineering Underwriting, CEE, Nord Countries, South East Europe Polish Re, Warsaw, Poland Michał Żelaśkiewicz Education: Experience: Position: Institute of Banking and Insurance (Engineer and Master Degree) 18 years of experience in insurance, working for domestic and foreign companies Product Manager, Property and Engineering Magdalena Czaja Education: Experience: Position: Warsaw School of Economics Ernst & Young, Polish Re 10 years in reinsurance department Team Manager, Marine Underwriter, Chief Area Manager: Russia Pomosch Insurance Company Ltd, Saint Petersburg / Moscow, Russia Mikhail Ermishkin Education: Experience: Position: Moscow Institute of Transport Engineers, specialty economy and management in construction; Moscow International Business School, specialty risk management in construction; Russian Academy of Entrepreneurship, specialty insurance 7 years in construction business; 12 years in insurance business Head of Department Support to Major Risks Dmitry Fokichev Education: Experience: Position: Higher Economical 11 years Director of Reinsurance Department RESO-Garantia Insurance Company JSC, Moscow, Russia Vladimir Nenashev Education: Experience: Position: Reunion AG, Zug, Switzerland State Academy of Management 20 yеars Head of Reinsurance Department Igor Prandetsky Education: Experience: Position: Doctor of Philosophy in Economical Sciences, Shevchenko University, Kyiv, Ukraine Over 20 years experience in insurance and reinsurance business, including international reinsurers Munich Re (11 years) as Underwriter and Manager, Swiss Re (2 years) as Manager. 7 years Manager of insurance brokers CEO 4th Reunion Engineering Insurance Roundtable, June 2-4, 2014, St.Petersburg, Russia 8

10 Irina Volochkovskaia-Guérin Education: Saint Petersburg State University of Economics and Finance, Russia; speciality Finance and Credit, specialization Insurance (Diploma with Honours). Since 2014 Chartered Insurance Institute, UK Experience: More than 10 years of insurance and reinsurance experience including as a Head of outwards reinsurance department with an insurance company and Senior underwriter with a reinsurance company Position: Director, Reinsurance Placements Oksana Eckert Education: Experience: Position: Olena Wespi Education: Experience: Position: Master s Degree in Banking, Kyiv National Economic University 12 years experience in the field of reinsurance. Between 2002 and 2005 she worked in the reinsurance department of EIA IC and has held senior posts at Megapolis IC and ASKA IC Deputy Director, Reinsurance Placements Pedagogical education. Graduate in business management with focus on Economy and Society Several years of experience in international business Associate Manager, Reinsurance Placements Reunion Insurance Broker LLC, Moscow, Russia Alexander Drugov Education: Experience: Position: Konstantin Artamonov Education: Experience: Position: Financial Academy (Moscow, Russia) «Ingosstrakh» OJSIC, «Korna K» LLC, Willis Group industrial property insurance and energy insurance, property, liability, cargo Head of Property and Liability Insurance Division MIPT, Engineer Physicist, Master Degree in Economics and Computer Science 19 years in insurance. Generali, PPF Director of Broker Sales Department, Allianz. Director of PMM Department. Worked in such Russian companies as Russian Insurance Centre, Russian Insurance Traditions Deputy CEO Roksana Bobrik Education: Experience: Position: University Economic Education Over 10 years Head of Reinsurance Division Reunion Ukraine LLC, Kyiv, Ukraine Yuriy Yaniuk Education: Experience: Position: Master of Science in Finance (Insurance Management Program) and Economics Professor, Kyiv National Economic University named after Vadym Hetman. Trainee Chartered Insurance Institute, London, UK Over 11 years experience in insurance business VIP-clients Sales, Reinsurance, Underwriting, Methodology, Affiliate Sales and Project Management CEO Rosgosstrakh Ltd, Moscow, Russia Igor Ryzhkin Education: Experience: Position: Moscow Automobile and Road Construction Institute, Civil Engineer 16 years in insurance Deputy Director of Property and Technical Risks Insurance Department 4th Reunion Engineering Insurance Roundtable, June 2-4, 2014, St.Petersburg, Russia 9

11 Olga Semenova Education: Experience: Position: University Diploma 18 years Reinsurance Department Chief Specialist Russian Reinsurance Company Ltd, Moscow, Russia Maria Morozova Education: Experience: Position: SCOR Global, P&C, Paris, France Tim Chapman Education: Experience: Position: Moscow Civil Engineering Institute Since 1993 in reinsurance Business Development and Client Management Department Bachelor of Engineering (with Honours), Chartered Engineer, Membership of the Institution of Civil Engineers (MICE) Chartered Civil Engineer with experience working for/as Major Contractor major infrastructure projects, Major Consultant-tunnel design, Loss adjuster, Risk Management, Underwriting Construction Manager Swiss Re Europe S.A., Munich, Germany Manuel Bezjak Education: Experience: Position: Martina Pöschl Education: Experience: Position: Civil Engineering and MBA degree (TU Munich) 5 years in Construction Industry, 10 years in Engineering Underwriting Senior Underwriter, Global Engineering Phd Biosystems, Engineering Studies Industrial Engineering and Management 6 years experience in mechanical and plant construction industry, more than 3 years experience in reinsurance Underwriter, Global Engineering Swiss Re Europe S.A., Zürich, Switzerland Thomas Raetzo Education: Experience: Position: Master of Mechanical & Process Engineering, Dr. sc. techn., Executive MBA Strathclyde UK Four years in pharmaceutical industry. 18 years at Swiss Re for various European, African and Asian markets of which four years in Hong Kong. For facultative and treaty business, risk and claims mgmt. Analytics & reporting Head Global EN Europe North & East, Africa & Analytics Torus Insurance (UK), London, United Kingdom Steven Norcliffe Education: Experience: Position: B.Sc. Degree in Mechanical Engineering, Professional Engineer, Chartered Insurer 12 years experience in power station construction, sales and commissioning followed by 20 years construction underwriting experience with Munich Re and Torus Senior Vice President, Construction and Power TRANSNEFT Insurance Company CJSC, Moscow, Russia Stanislav Sizarev Education: Experience: Position: Higher education 12 years Head of Sales Divisions 4th Reunion Engineering Insurance Roundtable, June 2-4, 2014, St.Petersburg, Russia 10

12 Unity Re Ltd, Moscow, Russia Svetlana Chepeleva Education: Experience: Position: VIG Re, Prague, Czech Republic Financial University under the Government of Russian Federation Since 1986 Deputy CEO, Chief Underwriting Officer Petko Koev Education: Experience: Position: Master of Economics, Insurance and Social Assurance Outward Reinsurance Manager , Inward Reinsurance Underwriter 2013 Underwriter Zurich Insurance Company Ltd., Moscow, Russia Eduard German Education: Experience: Position: Master of Commerce, Moscow State University of Commerce 13 years Head of Engineering Lines 4th Reunion Engineering Insurance Roundtable, June 2-4, 2014, St.Petersburg, Russia 11

13 Overview of losses in chapter Igor Prandetsky I would like to welcome you, on behalf of the Reunion team, to Constantinov Palace for the fourth Reunion engineering reinsurance round table. The roundtable represents a platform to share opinion and experiences in relation to engineering insurance practices in Russia and CIS countries. On one side, we have representatives from leading insurance companies that provide insurance coverage for engineering projects in Russia and CIS countries. On the other side, we have Russian and international reinsurers, which provide reinsurance capacity for mentioned projects. We have unique combination of participants to discuss current practices. Reunion is growing and this year, as you may have noticed, there are more representatives from our company. We are represented in three countries. Our headquarters are in Zug, Switzerland. Our daughter companies, Reunion Russia and Reunion Ukraine, are represented here. Our programme will be split into two topics. Within these topics, there are a number of different subjects. The discussions will be held in the same manner as in previous years: there will be a short presentation prepared by one of our participants followed by open discussion. Please feel free to contribute. Firstly, we have an overview of loss events, which have happened since the last event was organised last year. I would like to introduce Pavel Shaptsev from RusSurvey who will provide us with an overview of claims. Pavel Shaptsev Good morning. I am going to give you a brief introduction about our company and comment on some of the major loss events where we were involved in settlement in 2013 and We have been in Russia for 17 years representing the Crawford group. Our head office is in Moscow with branches in Saint Petersburg and a separate legal entity in Minsk. The company has more than 50 employees. Most of them have the necessary qualifications and specialist experience that helps us deal with the diverse issues faced by our clients. Our company in Russia also represents Global Technical Services, a business unit in the Crawford Group focused on big and complex losses. There are three certified GTS adjusters working in the company: Leonid Shuravin, Anton Shipilov and myself. Global Technical Services is the brand used by the Crawford Group to deal with complex losses, in particular engineering insurance cases. Because our network is well developed we are able to commission to the site a properly qualified adjuster. Because we have been in the market for quite a while, we understand the needs of both Russian and international insurers and reinsurers. That allows us to respond quickly to their requests and ensure all work is done as efficiently as possible. We have full-time staff and hire external specialists to help address any issues or tasks that emerge in relation to a claim. The settlement of engineering losses and construction all risks losses, machinery and equipment can involve a lot of participants in the process. We want to make sure that we help other parties cooperate effectively and help reaching synergies. A loss adjuster is an arbitrator. There is a need to cooperate and coordinate our efforts to reach our objectives. The positive involvement of all parties makes our work more effective. This cooperation ensures a quick result and allows us to settle a loss as economically as possible. We also always analyse our mistakes so that underwriters and other parties will capitalise on this experience and avoid similar mistakes in future. I will now cover some loss events that we have been involved in. One was an equipment installation failure. A press crown was being installed and, unfortunately, automated mode of installation failed. The contractor tried to do it manually which led to collapse. The resulting substantial loss, among other things, will most probably cause delay in commissioning of this manufacturing facility. We also have information about losses during the Sochi Olympics 2014 project construction. The soil rush took place when an automobile tunnel was being constructed. There is a video you can watch to see how it happened. The next event involved a residential construction project in Moscow, which included underground parking. The construction took place close to a five-story brick building. Contractor work to strengthen the excavation pit was of poor quality and the walls of the residential building cracked. It took almost three and a half years to settle the loss because there were so many parties involved, including the owners of the individual apartments in the building. We had to reach an agreement with each party individually. All the claims were finally settled. On the video, you can see a similar event. During the exploratory design, construction and assembly phases, Russian contractors apply techniques and methods some of which date back to the Soviet times; they are still quite useful. When international experts become involved, in particular on the reinsurer side, to investigate we face a mismatch between typical Western technologies and those used in Russia. The opinion of Russian experts should be taken into account. It would be inappropriate to argue that a technology or a settlement solution is incorrect in the eyes 4th Reunion Engineering Insurance Roundtable, June 2-4, 2014, St.Petersburg, Russia 12

14 of our Western colleagues. We сan look for compromise and move ahead not focusing on discrepancies between the conclusions made by Russian and Western experts. In the next case, welding works took place in close proximity of equipment covered by a tent. The tent caught fire from a sparkle and the equipment was badly damaged. Next let me share some information about an event everyone talks about. Loss settlement at Zagorskaya PSP 2 is still far from complete, I would say it is in the phase of effective settlement. It is too early to share any specific data. We can only say that settlement proceeds as planned. The activities are being monitored and we as adjusters are coordinating with insureds, insurers and reinsurers while maintaining the confidentiality of settlement data. Both Russian and international experts are working. When this settlement is finished those involved might want to write a book or a guide. 4th Reunion Engineering Insurance Roundtable, June 2-4, 2014, St.Petersburg, Russia 13

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24 Risks Evaluation 2 chapter Igor Prandetsky Thank you for the short overview of the claims that have happened since last summer. We would like to now cover how we evaluate risk and what we understand as risk from insurers and reinsurers point of view. We will also touch on the issue of the definition of PML. I will ask Rinat from RusSurvey to tell us about his experiences with regard to risk evaluation. Rinat Ramazanov Good morning colleagues, I am Rinat Ramazanov and I represent the RusSurvey Group. I will talk about risk assessment in construction and erection projects in Russia and the CIS. As we do insurance risk assessments, we are also involved, among other things, in construction and erection projects. Our company employs people who have previous experience with government technical supervision authorities, fire-fighting authorities, major insurance and construction companies. A typical Russian or CIS construction monitoring and management model is an old legacy from a time when quantity dominated quality. This means a low skilled workforce is used. It is also typical to try to save on construction materials; and there is a lack of controls over the quality and safety of construction and assembly works. Also, contractors tend to avoid mothballing when work is interrupted. Another typical feature is violation of documentation rules. There is a number of things that can delay projects in Russia and CIS, including lack of funding, non-compliance with modern standards, investor bankruptcy etc. For example in 2008 international financial crisis froze many construction projects. Many projects were suspended and effectively abandoned by the parties involved. Regrettably, in Former Soviet Union there is lack of clear guidelines in this area. Exclusion is Republic of Belarus where legislation specifies how mothballing should be made. Unfortunately, in Russia and Ukraine there is no such legislation. There is just piece of legislation that specifies which document needs to be drafted but no details are given in relation to what to do. Another document covers mothballing but in relation to government funded projects only. Incomplete construction projects can be subject to rusting or disintegration of concrete or bricks. If no structured approach to mothballing is used when construction resumes the costs involved in the restoration and reconstruction of a facility are often more than what would have been spent on mothballing. Other problems include low quality inspections in violation of urban construction regulations, a lack of observation of government standards, low quality of construction including incoming materials and equipment. Russian quality control system in construction industry which includes on-receipt inspection, process control, compliance with technical regulations, does not always prevent low quality. Typical violations include deviation from design documentation, lack of construction permits, no review of design documentation by an expert, violation in maintaining documentation, poor construction site control, and incorrect sequence of construction. These are some examples of violations. Here on the photos you can see that drainage is not yet done but construction is complete and equipment installation is in process. As a result water rushes into building. Here, we see logs used as form supports. The way the supports are installed does not provide enough rigidity and safety when concreting is performed. Other types of violations include absence of safety-related work permits, deviations from approved construction methods, non-compliance with environmental legislation, including storage and removal of building waste. One of other typical violations is poor fire prevention system. Buildings are not always equipped with fire extinguishers and there are no instructions on what actions to take in case of fire. Examples of such violations are shown here where you can see oxygen tanks stored on wooden pallets close to propane, at the same space smoking area is equipped. Another picture shows combustible materials and also equipment in burnable packaging stored right inside the building under construction. A fire could not only destroy the building but also expensive equipment. Let s have look at the most typical construction accidents in Russia over the last few years. These include collapse of buildings and structures, fires and failure of lifting equipment. Accidental collapses happen in both industrial and civil engineering projects bringing substantial material losses, and sometimes environmental damage and often fatalities. The cause behind many of these accidents is inadequate work arrangements and poor safety control. Most dangerous are deviations from design requirements, structural defectiveness of the building and improper technical condition of the building. Let s have a look at risks which arise in course of engineering researches. Before the decision to build a new project is made you need to make sure the ground will sustain static and dynamic load. It would be wrong to put up a multi-storey building on unstable grounds. You need to use modern methods and instruments to detect and prevent such accidents. Accidental collapses can also be caused by mistakes at design phase. Designing and constructing complex buildings requires skilled personnel which means 4th Reunion Engineering Insurance Roundtable, June 2-4, 2014, St.Petersburg, Russia 23