FAST DEVELOPING TECHNOLOGY UNDERWRITING AND CLAIMS ISSUES

Transcription

1 THE INTERNATIONAL ASSOCIATION OF ENGINEERING INSURERS 43 rd Annual Conference Berlin 2010 Working Group Richard Radevsky, Charles Taylor adjusting Ltd, London - Chairman Thomas Åström, Pohjola Insurance, Helsinki Stephanie Watkins, The Hartford Steam Boiler Inspection & Insurance Company, London Karl-Christian Hertenberger, HDI Gerling, Germany Mahmood Ahmed, Hamid Mukhtar, Pakistan Guido Benz, Swiss Re, Switzerland Peter Bender, Munich Re, Germany P. Dutta, New India Insurance, India Isabelle Kowalski, SCOR GLOBAL P&C - Paris FAST DEVELOPING TECHNOLOGY UNDERWRITING AND CLAIMS ISSUES Presented by: Eur Ing Richard Radevsky BSc, CEng, CSci, CEnv, IntPE, FICE, FCIWEM, MEI, MIFireE, FCIArb Technical Director Charles Taylor adjusting 1

2 FAST DEVELOPING TECHNOLOGY UNDERWRITING AND CLAIMS ISSUES Fast developing technology The pace of change Industries with high rates of development The drivers of changes Patents Increasing risks Industries of interest to engineering insurers Development of some power technology industries (steam turbines, gas turbines, wind turbines, solar) General findings Underwriting issues Characterising and quantifying risks Technical expertise and keeping up to date Simulation models Prototypes and fast developing technology Underwriting Issues (continued) Experience of the insured Material change in risk, deductibles and exclusions Serial loss, output improvements and repair costs Claims Claims problems Risk management post underwriting and the future The role of surveys and risk engineering Survey and risk engineering recommendations Changes in risk Innovative solutions The future IMIA WGP67(10) Fast developing technology underwriting and claims issues 2

3 FAST DEVELOPING TECHNOLOGY The first Parsons steam turbine 1884 IMIA WGP67(10) Fast developing technology underwriting and claims issues 3

4 PACE OF CHANGE Obvious changes Standards of living New ideas and discoveries More proficiency Science and technology bound together Exponential growth IMIA WGP67(10) Fast developing technology underwriting and claims issues 4

5 INDUSTRIES WITH HIGH RATES OF DEVELOPMENT High tech Applies to certain sectors Penetration can be deceptive IMIA WGP67(10) Fast developing technology underwriting and claims issues 5

6 THE DRIVERS OF CHANGE Moore s law Globalisation, productivity and competition Products with shorter life span IMIA WGP67(10) Fast developing technology underwriting and claims issues 6

7 PATENTS Monopoly Cost of repairs Competition Patents increasing IMIA WGP67(10) Fast developing technology underwriting and claims issues 7

8 INCREASING RISKS Past innovations without insurer involvement Market demand Modern design techniques Remote monitoring IMIA WGP67(10) Fast developing technology underwriting and claims issues 8

9 INDUSTRIES OF INTEREST TO ENGINEERING INSURERS The first Brown Boveri gas turbine IMIA WGP67(10) Fast developing technology underwriting and claims issues 9

10 DEVELOPMENT OF SOME POWER TECHNOLOGY INDUSTRIES Steam turbines Gas turbines Wind turbines Solar Panels IMIA WGP67(10) Fast developing technology underwriting and claims issues 10

11 GENERAL FINDINGS Changes are continuous Less advanced - more potential step changes Computing power Gas and wind turbines - fast developing IMIA WGP67(10) Fast developing technology underwriting and claims issues 11

12 UNDERWRITING ISSUES IMIA WGP67(10) Fast developing technology underwriting and claims issues 12

13 CHARACTERISING AND QUANTIFYING RISKS Claims histories unreliable Main underwriting criteria relate to maturity Information is vital Only underwrite what you really understand IMIA WGP67(10) Fast developing technology underwriting and claims issues 13

14 SIMULATION MODELS Useful in certain technologies Probability of success Extrapolation IMIA WGP67(10) Fast developing technology underwriting and claims issues 14

15 PROTOTYPES Defects more likely What is prototypical? When does it cease to be a prototype? Scaling up or down or reconfiguration IMIA WGP67(10) Fast developing technology underwriting and claims issues 15

16 MATERIAL CHANGE, DEDUCTIBLES, EXCLUSIONS Munich Re definition High deductible Innovation? Design exclusions IMIA WGP67(10) Fast developing technology underwriting and claims issues 16

17 SERIAL LOSS, OUTPUT IMPROVEMENTS AND REPAIR COSTS Serial loss Defect rectification Output improvement Repair cost Contingency plans? Sub-limits IMIA WGP67(10) Fast developing technology underwriting and claims issues 17

18 CLAIMS IMIA WGP67(10) Fast developing technology underwriting and claims issues 18

19 CLAIMS PROBLEMS 1 Fair price Black market Patent rights Parts difficult to source IMIA WGP67(10) Fast developing technology underwriting and claims issues 19

20 CASE HISTORY SCARCE LIFTING RESOURCES IMIA WGP67(10) Fast developing technology underwriting and claims issues 20

21 CLAIMS PROBLEMS 2 Second hand market problems Independent expertise Obsolescence Replace rather than repair Short product cycles IMIA WGP67(10) Fast developing technology underwriting and claims issues 21

22 CASE HISTORY CLAIMS INVOLVING PV PANELS IMIA WGP67(10) Fast developing technology underwriting and claims issues 22

23 RISK MANAGEMENT - POST UNDERWRITING AND THE FUTURE IMIA WGP67(10) Fast developing technology underwriting and claims issues 23

24 THE ROLE OF SURVEYS AND RISK ENGINEERING Opportunity to review progress Survey budgets Manage technology risk IMIA WGP67(10) Fast developing technology underwriting and claims issues 24

25 SURVEY AND RISK ENGINEERING RECOMMENDATIONS Spares Alternative technological solutions Redundancy Testing Updates Early procurement IMIA WGP67(10) Fast developing technology underwriting and claims issues 25

26 CHANGES IN RISK Underwriting assumptions Is a technology change a change in risk? Moral hazard IMIA WGP67(10) Fast developing technology underwriting and claims issues 26

27 INNOVATIVE SOLUTIONS Ways to make fast developing or complex technologies insurable Tunnelling Nuclear Photovoltaic IMIA WGP67(10) Fast developing technology underwriting and claims issues 27

28 THE FUTURE Opportunities and risks Limits and discipline Insurers need to explore: boundaries horizon scanning earlier engagement the influence of availability IMIA WGP67(10) Fast developing technology underwriting and claims issues 28

29 Questions? IMIA WGP67(10) Fast developing technology underwriting and claims issues 29