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CONSTRUCTION & OIL TERMINALLING

RISK EXPOSURES AND RISK TRANSFER


SOLUTIONS

Agenda
IOTs Business Matrix
IOTs Insurance Program
Risk Exposures
Claim Scenario
Risk Transfer Matrix
PI Cover
Way Forward
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Some Of Our Clients We Are


Representing

IOT Business Matrix

IOT Infrastructure & Energy Services Limited (IOT) a technical and logistics
solutions provider with domain expertise in
Engineering Procurement & Construction (EPC),
Terminalling,
Upstream Services,
Renewable Energy.

Internationally benchmarked standards across all business models

Successful handling of crude oil, petroleum products and petrochemicals as a


storage provider
Some major achievements across Pan India like Mumbai, Chennai, Goa in the
following fields:
Independent terminals,
Storage provider, Refinery Tankfarm,
Common User Terminals
Operations & Maintenance

18 terminals with a capacity of 2.9 million KL


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IOT Business Matrix Contd

IOTs EPC vertical, an


integrated engineering,
procurement and construction
service provider to the Oil &
Gas, Power and Infrastructure
sectors

Areas of expertise:
Service Provider from Concept
to Commissioning
Full in-house EPC Capabilities
Proven Track Record in the
Power Sector
Synergies with Terminalling
Business
Global experienec in completing
and commissioning EPC projects

Employ
over 2,000 people and
5
have a business presence in

Variety of operating
models

Our Understanding Of IOT Insurance


Programs

CAR/EAR/ policy directly as a main contractor


CAR/EAR Covered under main contract policy
when working as a sub-contractor

Covered also for Marine risks


Property coverage SFSP/IAR for operational
assets

Terrorism/Political risks/ Credit risks not covered


Covers need to be clarified on these Liability
products

D&O
Public liability/CGL
PI

Risk Exposures In Infrastructure


Projects

Involves in significant investment


Long implementation period

High exposures to potential losses from perils such as

Design flaws
Act of God Perils (Earthquake, Flood etc)
Accidents
Errors of commission/omission

These losses could adversely affect the viability


Time delays and cost overruns (escalation)
Wrong project estimations
Coordinating with multitude of contractors
Comprehensive insurance cover is the necessity for
addressing the requirement of all the stake holders including

lenders.

Claims Scenarios

Case1: Lower tier sub-contractor agreement/sub-contractor


management .
A main contractor engaging in a sub-contractor on a package
basis would be responded for the actions of the sub-contractors

Case 2: Performance specification/non-adherence/delays in


execution
Over & above the LD which may be triggered due to delay, the
EPC contractor may be sued for the dereliction of duty

Case 3: Defective design


Contractors PI would be triggered in case of defective design /
workmanship resulting in latent fault manifesting into a claim

Case 4: Inadequate supervision during construction


Professional negligence for lack of supervision for e.g in a civil
contract design drawings provided for bracing at a particular
level was aimed at sectional drawings

Risk Transfer Framework

What Does PI Cover?

Loss of documents

Defence costs

Sub-contractor
liabilities
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Professional acts,
errors or
omissions

Mitigation
costs

Covered Contractor Activities

Extensions
Continuous cover
Claims preparation costs
Libel, slander and defamation
Court attendance costs
Extended notification period
Intellectual property
Inquiries
Joint venture
Merger / takeover / sale / winding-up of
insured run-off coverage

Newly created / acquired subsidiary


company

Past subsidiary company


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Public
relations expenses

Some Exclusions

Aggravated, Punitive, Exemplary damages, Fines


or Penalties

Employers liability

Prior claims and circumstances

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Vulnerabilities :Types of Damages

Economic Loss

Property Damage
% of Claims Dollars
% of Claims Count

Bodily Injury Other

Bodily Injury Construction

0%

10%

20%

30%

40%

50%

60%

Vulnerabilities :Sources of Claims

Claim Dollars
Claim Count
Fees

Other

Electrical

Mechanical

Structural

Civil

Architect
0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

Way Forward

Understanding IOTs contractual risk sharing arrangement


Understanding current insurance program

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Operational assets
CGL/Public liability/D&O
Terrorism/Political risk
Customer credit

Finalize the risk transfer mechanism


Determination of Limit of Liability
In-principle decision to proceed
Collating of underwriting information
Detailed discussion on policy structure
Approach various Insurance and Reinsurance markets

Thank you
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