February 20th, 2009

Man-Made Catastrophes: 4Q2008

Posted at 12:50 AM ET

Julian Alovisi, Assistant Vice President, Instrat®

Location: Sicily, Italy
Event: ISAB power plant fire
Fatalities: 0
Insurance Details: The 562-MW ISAB power plant in Sicily was shutdown after it was damaged by a fire on October 14, 2008. Part-owner International Power said there was a fire at one of the two power generation units at the plant. International Power is part of a consortium with Mitsui that owns 49 percent of the power plant. The other 51 percent is owned by ERG. Nobody was injured, but due to the damage caused by the fire, both power generation units were shut down. One unit is expected to be operating again in January 2009 and the second production line, or power train, which accounts for 50 percent of the plant’s production capacity, is expected to remain offline throughout 2009, ERG said. The company added it expected to restart the second power train within the 20 month limit of insurance coverage, sufficient “to cover both the damage to the plant and the damage resulting from the interruption in production, excluding deductibles.”
Sources: Power in Europe, Platts Commodity News, Reuters News

Location: Durban, South Africa
Event: Oil refinery fire
Fatalities: 0
Insurance Details: An oil refinery in Durban was shutdown for months after a large fire broke out on November 13, 2008. The fire at the Engen oil refinery started in the main crude unit, the facility that feeds crude oil into the refinery’s processing units. The blaze broke out shortly after midnight and burned for around three hours before being put out at 03:10 local time by the refinery’s own fire fighting team. Investigations said the fire was caused by a mechanical problem related to pump failure. Engen described the damage at the main crude unit as “quite significant” but said no-one was injured. Reports said the plant, located in Durban’s southern Wentworth suburb, supplies South Africa with almost 20 percent of its refined fuel and is the county’s second largest refinery. Engen said the refinery, which has a capacity of 135,000 barrels per day, would be shut down until January 2009. The refinery’s manager said the shutdown is going to cost in the region of 6.2 million rand (USD600,000) a day and the total cost could run into hundreds of millions of rand (including 50 million rand for repairs alone). Engen said the fire destroyed some 50,000 liters of crude and the shutdown would force it to import refined oil and oil products for the period of the closure.
Sources: South African Press Association, Reuters News, Daily News, Cape Argus, The Times (SA), Business Report

Location: Mumbai, India
Event: Terrorist attack
Fatalities: 179 people confirmed dead
Insurance Details: At least 179 people were killed and more than 300 injured when a team of militants armed with explosives and guns caused extensive damage to several tourist sites in the Indian financial centre of Mumbai in attacks that started on November 26, 2008, and ended on November 29, 2008. Security officials said as few as 10 highly trained militants carried out the attacks and they targeted key sites in the city that included two upscale hotels (Taj Mahal Hotel and Oberoi Hotel), a popular café (Leopold Café), a major railway station (Chattrapati Shivaji) a hospital (Cama) and a Jewish centre (Nariman House). The buildings were badly damaged by the explosions and gun fighting and Insurance Day said the attacks could cost the insurance industry between USD300 million and USD600 million in property claims alone. According to officials, some of the militants arrived in Mumbai by rubber dinghy around 21:00 local time (16:00 UTC) on the night the killings began while the rest are reported to have been in the city for months gathering information on their targets. One of the first places to be attacked was the Chattrapati Shivaji railway station, where gunmen entered the platforms and fired on people indiscriminately. The militants then targeted other buildings in the city before Indian forces killed the last of the gunmen at the Taj Mahal Hotel on November 29, 2008, bringing an end to the attacks.
Sources: BBC News, Xinhua News Agency, Associated Press, Agence France Presses, Insurance Day, Reuters 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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