Project Partner

Construction & oil terminalling

Risk exposures and Risk transfer solutions

C:\Documents and Settings\SakpalD\Desktop\Project Partner-27.8.2012 vdraft v4.pptx

Time Stamp

DRAFT

DRAFT

0

26-08-2015

DISCUSSION MATERIALS

IOTs Business Matrix

IOTs Insurance Program

Risk Exposures

Claim Scenario

Risk Transfer Matrix

PI Cover

Way Forward

Agenda

1

DRAFT

Some Of Our Clients We Are Representing

2

DRAFT

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

IOT Business Matrix

3

DRAFT

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 have a business presence in over 11 countries.

4

Variety of operating models

DRAFT

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

Our Understanding Of IOT Insurance Programs

5

DRAFT

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.

Risk Exposures In Infrastructure Projects

6

DRAFT

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

Claims Scenarios

7

DRAFT

8

Risk Transfer Framework

DRAFT

DRAFT

9

Professional acts, errors or omissions

Mitigation costs

Sub-contractor liabilities

Defence costs

Loss of documents

What Does PI Cover?

DRAFT

DRAFT

Covered Contractor Activities

DRAFT

Feasibility studies

Front end designs

Detailed designs

Technical information calculation

Geotechnical studies

Project management

Surveying (Quantity and Land)

Procurement management

11

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

Public relations expenses

DRAFT

12

Some Exclusions

Aggravated, Punitive, Exemplary damages, Fines or Penalties

Employers liability

Prior claims and circumstances

DRAFT

Vulnerabilities :Types of Damages

DRAFT

13

Vulnerabilities :Sources of Claims

DRAFT

14

Understanding IOTs contractual risk sharing arrangement

Understanding current insurance program

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

Way Forward

15

DRAFT

Thank you

16

DRAFT

0%10%20%30%40%50%60%

Bodily Injury -

Construction

Bodily Injury -

Other

Property Damage

Economic Loss

% of Claims Dollars

% of Claims Count

0.0%10.0%20.0%30.0%40.0%50.0%

Architect

Civil

Structural

Mechanical

Electrical

OtherClaim Dollars

Claim Count

Fees

ComparativeArchitectArchitectArchitectCivilCivilCivilStructuralStructuralStructuralMechanicalMechanicalMechanicalElectricalElectricalElectricalOtherOtherOther

Fees

Claim Count

Claim Dollars

0.3752333161

0.4365143318

0.4453140512

0.244220123

0.2678715322

0.2280095458

0.0587616959

0.1135029354

0.1508886163

0.0719859269

0.0801197191

0.0782611373

0.0365896865

0.0202601589

0.0365896865

0.1185353958

0.0866201155

0.0817313227

TotalsFocus on Claims Update 1/01Claims Distribution by CountBased on 8,693 Closed Claim Files Closed Between 1/1/96 and 10/31/00Architect3,79243.7%Civil/Survey2,32726.8%Structural98611.4%Mechanical6968.0%Electrical1762.0%Other7108.2%Total8,687100.0%Claims Distribution by DollarsBased on $396,889,804 Closed Claim Payments (Indemnity + LAE) for Claims Closed Between 1/1/96 and 10/31/00Architect$ 176,740,60744.5%Civil/Survey90,494,66422.8%Structural59,886,15315.1%Mechanical31,061,0487.8%Electrical4,328,6921.1%Other34,378,6418.7%Total$ 396,889,805100.0%Fee DistributionBased on $5,793,000,000 Fees for In Force Policies (on Phoenix only) as of 11/30/00Architect$ 2,173,542,70937.5%Civil/Survey1,414,647,48724.4%Structural340,377,7075.9%Mechanical416,979,1967.2%Electrical211,946,1223.7%Environmental/Geotech548,399,2509.5%Other686,617,45711.9%Total$ 5,792,509,929100.0%Comparative Claims ExperienceArchitectCivilStructuralMechanicalElectricalOtherFees37.5%24.4%5.9%7.2%3.7%11.9%Claim Count43.7%26.8%11.4%8.0%2.0%8.7%Claim Dollars44.5%22.8%15.1%7.8%3.7%8.2%

ProjtypeDoes Experience Match Exposure?Parking GaragesDiscipline% of Claims Count% of Claims Dollars% of FeesArchitect2%3%1%Civil1%1%