lessons learned from aegis claims and loss control · pdf filelessons learned from aegis...

TUES_BKO_Lunch and Learn_v17 7/18/2017

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AEGIS Insurance Services, Inc.

Lessons Learned from AEGIS Claims and Loss Control

Mark Bluestein Vice President / Senior Counsel – Claims

Andrew Granzow Vice President – Claims

Joshua M. Fleischer Vice President – Loss Control Property Operations

Scot Macomber Vice President – Loss Control Utility Operations


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Claims & Loss Control

Mark Bluestein Vice President / Senior Counsel – Claims

Scot Macomber Vice President – Loss Control Utility Operations

Excess Liability


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Mission Loss Control Division

• Assist AEGIS member companies in maintaining effective and safe operating

systems while reducing their overall long-term cost of risk, by developing and

providing products, services and training specifically for this purpose

Loss Prevention – Utility Operations

• Risk assessments conducted on a 3-year cycle

• Work with member utility risk manager and subject matter experts

during risk assessment

• 2- to 3-day engineering document review and discussions

• Half day field visit

• Written “draft” report issued to AEGIS Underwriting with a copy available

to the Risk Manager


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Natural gas topics Loss Prevention – Utility Operations

• Damage prevention

• Pressure control

• Odorization

• System inspections

• Customer premises practices

• Customer and public safety awareness

Natural gas topics Loss Prevention – Utility Operations

• Call center operations (a separate in-depth assessment also offered)

• Distribution Integrity Management Plan (DIMP)

• Operations, maintenance, and emergency plans

• Contractor pre-qualification review and evaluation

• Occupational safety

• Transmission (pipeline) Integrity Management Plan (TIMP)

• Natural gas storage facilities (underground / LNG / propane-air if applicable)


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Claims

Odorization Claim

Pork Plant Blast Kills One, Injures 14

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwi8pvG3vt_UAhXJ7IMKHc2ICsYQjRwIBw&url=http://www.nydailynews.com/new-york/nyc-crime/east-village-gas-explosion-homicide-probe-article-1.2175161&psig=AFQjCNG7gTzwbczRyrgL_sPeH772iyYVPA&ust=1498702772943869


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Odorization Claim

• Natural gas-fueled explosion at plant that was under construction

• Gas company responsible for supplying gas to plant

• Contractor opened valve to “purge” air from gas line

• Gas filled building until it found an ignition source

• Explosion blew a 150-foot hole in the roof and caused a partial collapse

• One worker killed and several injured

Odorization Claim

• Gas company sued for lack of adequate odorant

• Gas company claimed it odorized gas distributed to plant

• Gas company carefully monitored amount of odorant injected

• Gas company took odor meter readings at various points in system

• Gas company kept excellent records

• Post-loss investigation found adequate levels of odorant


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Odorization Claim

• State investigators and Fire Marshal indicated positive sniff tests

• Issue was “odor fade” and adsorption in new steel pipe at plant

• Phenomenon well-known in the industry; contractor should have known

• Gas company found 12% liable for loss

• Should have better informed / educated contractors of issue

Prove natural gas is odorized Odorization

• The sole purpose of natural gas odorization is to help the public

identify when there is a possible problem with leaking or otherwise uncontrolled

natural gas

• LDC is solely responsible for maintaining, inspecting, correcting and

documenting that a readily detectable odor level is always present

−Note type of odor chemical used

−Monitor injection rates so a wide variation is not encountered

−Have contingency plan if odorization injection fails

−Ensure inspections conducted as required


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Prove natural gas is odorized Odorization

• Select strategic locations to represent the system for inspection

• The employee conducting the inspection is limited to a number of locations

daily and has been tested for a “normal sense of smell”

• Instruments used in the inspection have been calibrated, identified by a unique

company number, and that number appears on the compliance documentation

• The proper odorization or “pickling of pipe” is included in company procedures

Loss Control products and services Odorization

• Gas operator training (fee-based)

−First response

−Leak pinpointing

−Leakage program management

• Lessons Learned videos

−The Smell of Danger

−Anatomy of a Gas Leak


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Loss Control products and services Odorization

• Recognizing and avoiding the hazards

• Focused service

−Odorization program document review

• Webinar

−Public safety communications

Call Center Claim

Explosion Levels Apartment Complex


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Call Center Claim

• Caller contacted gas company about a gas leak / odor outside, in street

• CSR asked the caller

−Where was the leak?

−Could she smell gas in her apartment?

− If so, was it a strong smell?

• Caller was NOT advised to evacuate the building

• Caller advised to close windows and remain inside apartment

Call Center Claim

• Fire department arrived first and secured area near leak

• Gas company arrived and began actively trying to repair the leak

• No evidence that responding crew knew people were in the building

• While gas company employee was shutting off gas, explosion occurred

• Critical burn injuries to 22-year-old mother

• Fire department had sovereign immunity

• Gas company held solely responsible for all BI and PD losses


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First line of defense Call Center

• Call centers receive, review and forward information from callers reporting

natural gas emergencies. This process initiates a utility’s emergency

response system:

−NAME of caller

−ADDRESS of caller

−NATURE of the call – inside odor, outside odor, facility damage, carbon

monoxide emergency, etc.

First line of defense Call Center

−ADVICE to the caller

◦Leave the area immediately and ask others to leave with you;

go to a safe location

◦Don’t turn lights, electric switches, or appliances on or off, don’t light a

match or start a car, leave the phone off the hook; we will disconnect you

from our end

−ADDITIONAL actions

◦Follow up with dispatcher

• Follow existing PSA – “Leave the area immediately and call from

a safe location”


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Loss Control products and services Call Center

• Call center risk assessment

−Half day call center review of emergency call handling

• Gas operator training (fee-based)

−Call center training

• Focused service

−Call center training based on risk assessment findings

Loss Control products and services Call Center

• Lessons Learned videos

−Call For Help

−First Line of Defense

• Webinar

−Company experience in public safety advice


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Electric topics Loss Prevention – Utility Operations

• Substation design, construction and inspection

• Transmission design, construction and inspection

• Distribution design, construction and inspection

• Vegetation management / tree trimming

• Pole inspection

• Joint pole use / ownership operations

Loss Prevention – Utility Operations

• Call handling practices / procedures

−A separate in-depth assessment also offered

• Downed wire dispatch procedures

• Public safety and awareness

• Environmental programs

• Dams

• Contractor safety review and evaluation

• Occupational safety


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Substation Contact Claim

Boy Burned in Substation Accident

Substation Contact Claim

• 11-year-old boy gained access to fenced-in area of substation

• Climbed tower and contacted energized equipment

• Friend also entered substation, but was not injured

• Children testified they and others entered on many prior occasions

• High fence with barbed wire met NESC standards

• Gate fencing was substantially lower; had no barbed wire

• Large gap between gate fencing where it locked

• Large gap also under gate fencing

• No safety / warning signs at or on fence gates

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjm8biysdnUAhUn7IMKHZcVDhUQjRwIBw&url=http://historyofseth.blogspot.com/2008/04/no-trespassing-really.html&psig=AFQjCNH5L3UDQOsqJ83Iasfp7NAFzZZPVA&ust=1498493448271811


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Substation Contact

• Substation entry by unauthorized or unqualified persons presents a significant

exposure to injury from contact with energized equipment. Fences and signs are

intended to keep the public from entering these facilities.

• Entrance gates

−Gaps less than four inches

• Perimeter fence

−Overall height of the fence seven feet (including one foot of barbed wire)

−No wash-outs under fence

Substation Contact

• Safety and warning signs

• Signs for unauthorized entry

• Grounding

• Climbing aids

• Attractive nuisances

• Station lighting


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Loss Control products and services Substation Contact

• Webinars

−Model practices – the utility’s physical security plan

−Physical security at electric substations

−Substation safety and security – inside and out

• Physical security seminar

Loss Control products and services Substation Contact

• Lessons Learned™ videos

−Deadly playground


• Focused service

−On-site inspection and training

• Inspection guide

• Substation public safety and security inspection form


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Overhead Wire Contact Claim

Mother Killed by Downed Line


• Clear, sunny day

−No recent storms

−Conductor falls in backyard

• Energized line contacts 39-year-old mother of two

• 4-year-old and 2-year-old daughters witness loss

• Fire department first responders cannot assist due to energized line

• Utility responders de-energize line 20 minutes later

• Mother burned over 80% TBSA; and died three days later


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• Issues

−Line had fallen previously; homeowner expressed concern to utility

− Improperly installed splice

− Inadequate inspections

−PUC issued civil penalties; mandated improved inspection procedures

Overhead conductor failure Electric Contact

• Regular inspections of all facilities supports proper maintenance programs and

helps identify substandard conditions before they become serious hazards.

NESC rules 214 and 313 do not specify inspection frequencies, but

“as experience has shown to be necessary.”

• Regular inspection program monitoring the condition of the system

−Primary, secondary, service conductors

−Cross-arms, cross-arm support brackets

− Insulators

−Guy wires


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• Pole inspection programs

−Wood pole ground line

−Steel pole ground line

• Vegetation management

−Tree clearances


• Any conditions found that may pose an immediate hazard to the public or to

employees should be corrected immediately. Risk of immediate loss of supply

or damage to the electrical system should be promptly addressed.

• In addition to documentation to verify that an overhead conductor has been

inspected, it is important to maintain records to indicate the corrective action

taken, such as assigning a repair order and priority to each deficiency and

tracking the status of the repair order from initiation through completion


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Loss Control products and services Overhead Conductor Failure

• Webinars

−How safe is your connector splice

−Wood pole testing

−Steel pole corrosion

− Inspection and maintenance practices for steel T&D structures

−Pole attachments – issues, concerns, and solutions

Loss Control products and services Overhead Conductor Failure


• Inspection guides

• Distribution line inspection form

• Overhead distribution inspection practice guidelines


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Public Safety and Awareness Messages

• Failure to warn is almost always raised in lawsuits

−Targeted audiences

◦Customers

◦Affected public

◦Schoolchildren

◦First responders

◦Public officials

◦Contractors


Claims & Loss Control Property

Andrew Granzow Vice President – Claims

Joshua M. Fleischer Vice President – Loss Control Property Operations


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Property Claims Department

• Property claims department – three staff members

−Vice President Property Claims

−Executive General Adjuster

−General Adjuster

• Handle claims arising under operational & construction policies – first party

property, not liability claims

• 198 pending claims with a total incurred of $135 million

Claim Examples


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Collapse 5 Crack

4

Electrical 27

Fire 34

Flood 13

Mechanical Breakdown 76

Wind 5

Other* 30

Hail 4

Outstanding Claims as of June, 2017 By cause of loss, number of claims

* includes: explosion, lightning, transit, water


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Property Claims Handling

• An independent adjuster (IA) is assigned to each loss and directed by AEGIS Claims Adjuster

• The IA manages the loss by directing the adjustment team according to instructions of the market

• IA does not have authority to decide coverage or quantum

• The adjustment team typically consists of:

− Engineering consultant to investigate cause and to estimate repair / replacement cost

− Forensic accountant to calculate the loss and measure Business Interruption (BI)

− Possibly coverage counsel

− Subrogation counsel and consultants

AEGIS Property Claims Differentiators

• With a large percentage share, AEGIS leads, rather than follows the market

• AEGIS Claims controls the loss in the favor of AEGIS & our members by:

−Setting the direction of a claim early by the controlling the selection of the IA,

consultants, and counsel

−Managing the losses in a proactive manner to get reliable estimates of loss

−Ensuring there is effective communication from the insured to the IA

to the market

• AEGIS cannot direct the other participating companies in the market, but can

influence them with our percentage share and technical expertise


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Loss Control Property Operations

• Loss control property operations group

− 18 staff

−Additional 5 provide analytical support

• Utility industry experience / focused

on power generation

• Property, machinery, builders risk assessments,

and focused services to our members

• My Risk Assessments (MRA) portal

Loss Control Property Operations

• Involved in industry organizations /

technical committees

− (e.g. NFPA, IEEE, SFPE, EEI)

• Stay abreast and involved with major

equipment manufacturers and service

providers (e.g. Siemens, GE, etc.)

• Review claims for lessons learned


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Transformer

19%

Operational Testing

18%

Steam Turbine

14%

Generator

13%

Emergency Battery

7%

Major Systems

5%

Predictive Maintenance

4%

Electrical Maintenance

4%

Boiler

4%

Gas Turbine

4%

Pressure Vessels

3%

Operations

3%

Maintenance

1% Miscellaneous

1%

Machinery Risk Reduction Suggestions 2011-2016

Fire Protection Systems

37%

Risk Reduction

Programs

29%

Major Equipment

13%

Fire Detection Systems

9%

Water Supply

7%

Passive Protection

1%

Detection Systems

1%

Fire Signaling System

1% Protective Systems

1% Miscellaneous

1%

Property Risk Reduction Suggestions 2011-2016


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Loss Prevention Fire Protection and Machinery

• Fire protection systems

− Inadequate lube oil hazard protection

• Risk reduction programs

− Inspection, testing and maintenance procedures

to ensure fire protection systems maintained

by NFPA standards / codes

• Turbines and generators

−Changes in operational profile of units

due to increase in cycling

Property Claims & Loss Control


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Background Steam Turbine Mechanical Breakdown Claim

• 155 MW Westinghouse steam turbine – mechanical breakdown and fire

• Unit tripped offline – row L-0 blades liberated – smoke and fire ensued

• Extensive damage to the steam turbine and generator

• Claim settled – net loss: PD $13.1 million

BI $2.6 million

$15.7 million

Steam Turbine Mechanical Breakdown Claim

Fire at Power Plant…


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Steam Turbine Mechanical Breakdown Claim

• Typical turbine stages

− HP, IP, LP

• Superheated steam / LP-saturated steam

• High cycle fatigue

− L-0 blade liberation

• Lube oil leak

• Inadequate under turbine fire protection

• Ensuing fire

Loss Control products and services Steam Turbine Mechanical Breakdown

• Conduct risk assessments

− Inadequate / lack of under turbine fire protection

as opposed to, for example, a transformer

−Lube oil flow path for fire protection

−Review historical vibration trends

−Review alarm set points

−Review quantity of starts / stops of unit(s)

−Review water chemistry


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Boiler Explosion Claim

Background Boiler Explosion Claim

• Explosion occurred in unit 40’s reheat furnace

• Two employees went to inspect the reheat furnace after the control room noticed

an issue with flame pattern and stability

• As they were returning to the control room, heard steam leak and

the explosion followed

• Net loss: PD $56 million

BI $36.5 million

$92.5 million


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Boiler Explosion Claim

Explosion at Power Plant…

Boiler Explosion

• Tube failure caused burner extinguishment

• History of tube failures


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Less Control products and services Boiler Explosion

• Risk Assessments review operating history and unit issues

−Percent of tubes failed

−Tube material evaluation

• Further investigation warranted?

• Was there a root cause?

• Was there a boiler

useful life study?

Damage During Hydro Test Claim Background


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Background Damage During Hydro Test Claim

• Loss occurred at a 472 MW combined cycle plant

• One of the four operating units consisted of two combined cycle gas turbines

(GT1 & GT2) and one steam turbine, providing total output of 210 MW

• On the date of loss – repairs had been done to the Heat Recovery Steam

Generator (HRSG) related to GT1 and a hydro test was required

• Water entered steam turbine causing a rubbing of components

and damage

• Total property damage net loss: $3.15 million

Damage During Hydro Test Claim

Human Error Leads to ….


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Damage During Hydro Test Claim

• Steam turbine water induction incident resulted

from improperly isolating boiler during hydrostatic

pressure test

• The steam turbine is part of two-on-one combined

cycle power block

• Operators failed to properly isolate the boiler by not

using the double block and bleed valves

• Resultant damage included rubbed discs, wiped thrust

bearing, and rotor replacement

Loss Control products and services Damage During Hydro Test

• Risk assessments

−Review of operating procedures

◦Procedures for hydro testing during operation of the steam turbine

◦Lock out / tag out

−Training

−Data review of last inspection / work for the isolation valves

• Focused services

−Water induction study

• Webinar

−Prevention of water damage to steam turbines


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Fire Protection Training Class Engineering Services

• Held annually

• Next class: October 17-19, 2017

−Oklahoma State University

• Classroom and hands-on training environment

• Topics include

−Power plant hazard identification

−Fire protection design concepts

−Fire pumps and water supplies

−Sprinkler systems

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