February 18th, 2009

Man-Made Catastrophes: 2Q2008

Posted at 12:50 AM ET

Julian Alovisi, Assistant Vice President, Instrat®

Location: Hamilton, New Zealand
Event: Icepak cheese storage explosion and fire
Fatalities: 1
Insurance Details: An explosion and fire at an Icepak cheese storage complex near the city of Hamilton flattened the building and destroyed up to 4,000 tons of cheese worth NZD25 million (USD13 million) on April 5, 2008. The fire was left to burn out as fire crews ran out of water with which to battle it. Reports said the property was not protected by sprinklers. One firefighter was killed and eight others were injured as they attempted to extinguish the blaze.
Sources: New Zealand Press Association, Associated Press Newswires, Australian Broadcasting Corporation, Newstalk ZB, The Nelson Mail (NZ,) Waikato Times

Location: Offshore Al-Jurf oilfield damage, Libya
Event: Damage and shutdown of Al-Jurf oilfield
Fatalities: 0
Insurance Details: A mechanical failure caused Libya’s offshore Al-Jurf oilfield to shutdown on 24 April. The 70,000 barrel-per-day field is operated by Mabruk Oil Operations, a subsidiary of French oil major Total. During the drilling operation of one of the development wells, B18 (gas injection well), a deviation occurred in the well trajectory resulting in damage in the production pipe of the adjacent well, B12. For security reasons, all the platform wells were shutdown. Production from the oilfield is not expected to resume until early 2009, but repairs were completed in November.
Sources: Datamonitor News, Global Insight Daily Analysis, International Oil Daily, Platts Oilgram News

Location: Los Angeles, California, United States
Event: Universal Studios fire
Fatalities: 0
Insurance Details: Ten firefighters were injured when a massive fire severely damaged several movie sets and exhibitions at Universal Studios in California on June 1. According to fire officials, the blaze started at about 04:45 local time (11:45 UTC) and ripped through several sets and warehouses, sending plumes of smoke into the air which were visible for several miles. The fire destroyed a soundstage, a New York streetscape used in films and TV shows, most of the town square seen in the “Back to the Future” movies, and a Universal Studios King Kong tour attraction. Reports said the fire spread to the size of two city blocks and burned for 12 hours before 500 firefighters were able to extinguish it. The park was closed all day on June 1, 2008 but Universal said it re-opened the next day. Reports said the damage from the fire could be as high as USD500 million, and an investigation into the cause suggested it was accidentally started by workmen using a blowtorch on the roof of a film set. A Universal spokeswoman said it was insured for the damage and lost business.
Sources: Los Angeles Times, CNN News, Associated Press, Agence France Presse, Reuters News, CBS News

Location: Varanus Island, Western Australia
Event: Apache Energy gas plant fire
Fatalities: 0
Insurance Details: An explosion and fire at an Apache Energy offshore gas plant on June 3, 2008, in Western Australia cut supplies to industrial customers, including major resources firms, for two months, as the plant was severely damaged. None of the plant’s 152 employees were injured in the explosion, but it disrupted industrial companies in Western Australia severely, as the plant supplies 30 percent of the state’s needs. The drop in gas supplies forced mining companies, metals refiners, and other industrial users in the state to reduce their production. As Western Australia lost one-third of its domestic gas supply, the shortage resulted in thousands of workers being laid off or asked to take their annual leaves until supplies were partially resumed in early August (110 million cubic feet of natural gas per day). Apache Energy had still not restored gas production at the plant to its full capacity of 180 million cubic feet by January 2009, when gas production was at 85 percent. The Chamber of Commerce and Industry said the explosion had cost the state’s economy AUD2.4 billion (USD2.2 billion), and may eventually cost up to AUD6.7 billion (USD6.3 billion). According to Swiss Re, the incident triggered insurance claims worth USD1.8 billion.
Sources: Reuters News, Australian Associated Press, Associated Press, Agence France Presse, Swiss Re, The Australian, Dow Jones International News, Platts Commodity News

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Guy Carpenter’s Instrat® department provides CAT-i reports for major natural catastrophes worldwide. These reports cover catastrophes including worldwide tropical cyclones, earthquakes, major UK and European floods and any other natural event that is likely to incur a significant loss to the (re)insurance industry. Please email CAT.i@guycarp.com if you wish to be added to the free email distribution list.

Instrat also provides RISK-i reports for major technological or man-made events worldwide. These reports cover risks to property, transport and life including explosions, fires, crashes, engineering disasters and terrorist attacks that are likely to incur a significant loss to the (re)insurance industry. Please email RISK.i@guycarp.com if you wish to be added to the free email distribution list.

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