22 September 2016
Onshore energy report calls for improved risk surveys to reduce major losses
A new report published by the Lloyd’s Market Association (LMA) highlights the key trends in causes of major losses in the onshore oil, gas and petrochemical industries. Launched this week at an event in the Lloyd’s Old Library attended by over 160 market practitioners, the report calls for a renewed focus to improve risk engineering surveys to help reduce the risk of major losses.
100 major losses(1) over a 20 year period were identified and split into two categories: ‘mechanical integrity failure’ (43% of losses) and ‘non-mechanical integrity failure’ (57% of losses).
The report recommends closer examination of a number of key areas relating to major losses when undertaking risk engineering surveys. These include: efficacy of inspection programmes (including material verification); operating procedures (particularly during infrequent or abnormal operations); quality of process hazard analysis reviews; safe isolation of equipment; and the availability of safety-critical devices.
LMA’s Patrick Davison, Senior Executive, Underwriting said “The purpose of the analysis is to guide insurance risk engineers to shape and prioritise their risk surveys to focus on the common causes of losses. This guidance builds upon current LMA documents for risk engineers(2), which will be updated accordingly. We encourage risk engineers to consider the full recommendations in the report to ensure the energy industry is better protected from future major losses.”
An Analysis of Common Causes of Major Losses in the Onshore Oil, Gas & Petrochemical Industries is available to download from the LMA website: www.lmalloyds.com/energyreport.
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Notes to Editors
1. Major loss has been classified as a total loss greater than USD 50 million per Willis Energy Loss Database (WELD) Total loss = ‘ground up’ property damage + business interruption net of waiting period (where covered). Losses from natural catastrophes have been excluded.
2. Guidelines for the conduct of risk engineering surveys (OG&P GRES 2015/001); Key information guidelines for risk engineering survey reports (OG&P IGRES 2015/001).
For further information please contact:
James Milne, Communications Manager
Lloyd’s Market Association
T 0207 327 8405
About the Lloyd’s Market Association (LMA)
Formed in 2001 and located in the heart of the Lloyd’s Building in the City of London, the Lloyd's Market Association represents the interests of the Lloyd’s underwriting community. All underwriting businesses at Lloyd’s are members, together managing gross premium income of around £27billion per annum.