Process Safety-of Key Interest in Insurance Risk Engineering Surveys

Risk management is an integral part of day-to-day business activities in the energy industry with the risk basket stretching from commodity prices and industry image to health, safety, and environment. The most inherent of these risks are those related to asset damage, business interruption, pollution, injuries to people, and third party liabilities.

The industry manages these risks through its risk management portfolio that encompasses engineering design, management systems, emergency response plans and of course Insurance. The industry’s biggest assurance against a major loss making incident is Insurance.

When underwriting an engineering risk in an organization such as a Petroleum Refinery, insurers rely on a variety of information sources, most important amongst which is the site’s Risk Engineering Survey report. The insurance broker will typically lead the survey team and prepare the survey report, and it is usual for prospective re-insurer representatives to accompany and be part of the survey team. The insurance survey teams bring to the site vast knowledge of loss incidents in the industry and experience of visiting multiple and varied sites. It is our experience that the survey teams display a keen and sharp eye in being able to pick up the good and the not so good and can positively influence improvements at the surveyed site.

Process safety is the major factor in the agenda of the insurance survey and greatly influences the outcome of the survey and of course insurance premiums as well as extent of re-insurer participation.

What is that insurance surveyors look for during these surveys?

From the experience gained from facilitating insurance surveys, this paper looks at some key process safety ‘insurance critical’ factors that surveyors are interested in. From fire proofing of structures and fire water pumps to long bolt flanges and relief valves, the paper examines why these are critical to the insurers and discuss these with reference to industry standards and lessons from past incidents. It is our experience that process safety on site has benefitted from the recommendations that come out of these surveys.

The insurance survey is a beneficial process- sites benefit from improved process safety and hopefully, lower premiums.