February 19th, 2009

Man-Made Catastrophes: 3Q2008

Posted at 12:50 AM ET

Julian Alovisi, Assistant Vice President, Instrat®

Location: Barajas Airport, Madrid, Spain
Event: Plane crash
Fatalities: 153
Insurance Details: A Spanair plane carrying 172 passengers and crew crashed as it attempted to take off from Madrid’s Barajas Airport on August 20, 2008, killing 153 people. A preliminary report said the aircraft crashed because the wing flaps were in the wrong position. According to Business Insurance, ACE Ltd leads cover for the crashed airliner under a policy for a group of airlines that includes SAS. In addition to SAS, the group includes Austrian Airlines, Finnair, Icelandair and TAP Portugal. Business Insurance said Spanair is covered under the hull and liability programme written for the SAFIT Group. According to Business Insurance, market sources said the MD-82 jet was valued at USD9 million. The MD-82 was carrying a total of 162 passengers, four non-working crew members and six working crew members, Spanair said. A spokesman for Spanair said the plane had passed a safety inspection in January. Spanish media said Spanish, German, Swedish, Chilean, and Colombian nationals were among the passengers. Barajas Airport closed after the crash but reopened more than two hours later, allowing a limited number of takeoffs and landings, an airport official said.
Sources: CNN News, BBC News, Associated Press, Agence France Presse, Reuters News, Business Insurance

Location: Channel Tunnel, English Channel
Event: Channel Tunnel fire
Fatalities: 0
Insurance Details: The Channel Tunnel was forced to close on September 11, 2008 after a “serious fire” broke out on a freight train carrying 27 trucks about 7 miles (11 kilometers) from Calais. Thirty-two people on board were led to safety, 14 of whom had suffered minor injuries, including smoke inhalation. More than 300 French and British firefighters tackled the blaze overnight, and some 27 vehicles were affected. The fire was detected about four-fifths of the way through the 30 mile-long (50 kilometer) northbound tunnel on the freight train travelling from Folkestone to Calais. The fire raged for almost 20 hours, and all train traffic was suspended for two days, leaving tens of thousands of Eurostar passengers stranded. Temperatures reached 1,800 degrees Fahrenheit (1,000 degrees Celsius) during the fire, damaging the northbound tunnel and forcing its closure. Train traffic resumed slowly on September 13, 2008 with a reduced Eurostar passenger service operating (about half the normal traffic). Trains were running in one of two tunnels that normally carry traffic until September 22 when the northbound tunnel was partially reopened. The damaged tunnel will completely reopen in February 2009. However, services were almost back to normal in October and the total cost of the repair work might reach about EUR120 million (USD155 million), according to a Eurotunnel estimate. The company said revenue of EUR22 million (USD28.3 million) was lost as a result of the fire and resulting disruption of services. An early investigation into the fire said it may have been started by a lorry carrying highly flammable carbolic acid, or phenol. Officials said they suspected the fire started in a truck’s braking system that overheated and spread to a tire. Eurostar said five of its trains were en route when the fire broke out, with 2,000 passengers affected. According to the Daily Telegraph, Eurotunnel is believed to have made an insurance claim of around EUR180 million (USD230 million) for damage to the tunnel and business interruption. The lead insurer is Excel Insurance Services, the Daily Telegraph said.
Sources: BBC News, Agence France Presse, Reuters News, Associated Press, Daily Telegraph, Business Insurance, Financial Times

Location: Medgaz Gas Platform, Mediterranean Sea
Event: Medgaz pipeline accident
Fatalities: 4
Insurance Details: Four workers were killed and another four injured on September 17, 2008 in an accident on the Saipem-owned platform laying the Medgaz gas pipeline from Algeria to Spain. Saipem, the Italian oil services group building the Medgaz gas pipeline under the Mediterranean Sea, said a mechanical failure on one of the platform’s cranes was responsible for the accident. The accident reportedly occurred when pipe section that was being lifted fell on a group of workers as they were moving it into the sea. All of the workers, except for one of the injured, were employed by Saipem. Work was halted on September 17, 2008 following the accident, and Saipem resumed construction of the deepwater section on October 16, 2008. The EUR900 million (USD1.2 billion), 630 mile (1,050 kilometer) pipeline was completed in December.
Sources: Reuters News, Agence France Presse, 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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