LA SALUD EN COLOMBIA

Because of the special hazards that exist in the hydr­ ocarbon industry, major brokers have created special­ ist departments to relate to the oil companies and their potential insurers.

4.4.1 Technical Risk Management

Different hazards obviously exist in the various oper­ ations enumerated in major operation phases of the industry. It is necessary to quantify the nature and extent of the risk of loss and damage to which each type of property can be exposed in order to determine the extend to which these risks and the consequence therefore can and should be insured.

Risk management is essential in today’s oil industry. As an emerging science, risk management may very well prove to be valuable as many of the technological dis­ coveries that have improved the quality of drilling and servicing over past years.

To write oil risks need regular on-site inspections by qualified engineers, together will full disclosure of technical data by the placing broker.

An accurate asset valuation system is material to any risk management exercise. There are a number o-f well established indices -for the industry such as Engineer­ ing News Registry (E.N.R.) in the U.S.A., which have historically been used by insured to maintain up-to- date replacement values. As brokers, do not o-f-fer their services -for re-valuation exercises since this important function should be carried out by one of the known independent, professional firms, who will carry their own relevant professional indemnity cover.

4.4.2 Estimated Maximum Loss (E.M.L.)

The concept of the estimated maximum loss is particu­ larly important in non-marine oil and petrochemical insurance. Underwriter will generally consider the EML to be more significant than the sum insured. Some will not wish to cover the full value, but only up to a limit of liability.

EML could be defined as "the likely maximum estimated loss that could be sustained in single fire and for explosion incident following and evaluation of hard­ ware, software and fire fighting facilities". The evaluation is performed by applying weighting factors to various heading within these three categories.

It is possible that, under certain catastrophic cond­ itions, a much higher loss could occur, even if its probability is almost negligible. In the oil and pet­ rochemical industry, the most relevant condition is an Uconfined Vapour Cloud Explosion (UVCE),

The definition of a UNCE is "an explosion caused by the rapid release of a large quantity of flammable vaporising liquid or high pressure gas mixing with air to form a flammable mixture which ingnites at the periphery causing a fire and increased convective mixing of the flammable vapour and air causing the fire to develop into an explosion". An underwriter will normally take this into account in addition to fire/explDsion EML.

4.4.3 Deductibles

Having considered their maximum exposures, an oil com­ pany will also have to consider the amount it can ret­ ain on any loss. Large companies, particularly the multi-nationals and state-owned companies, will often be prepared to self-insure a substanial amount. This will be normally be achieved by the acceptance of a deductible an amount that will be deducted from each and very loss.

An insured will wish to choose its deductible in the light of the premium credit that underwriters are pre­ pared to give as well as its own financial resources.

4.4.4 Peri1s

Having established a deductible, an oil company will have to take a decision on the perils to be insured. A large company will probably not wish to insure aga­ inst perils such as burst pipes and impact by road- vehicles where the estimated maximum loss following

such perils could be less than their chosen deduct­ ible. They will probably select "full fire and exp­ losion" cover to protect themselves against the most likely causes of large loss (the World "Full" indica— ates the elimination of all the exclusion otherwise applicable such as earthquake, fire, except for the mandatary "war risk/nuclear "exclusion).

A large company may also select certain perils which have particular application to their own operations, such as impact to jetties. If they operate in earth­ quake areas, they may include the peril of earth­ quake or seaquake shock in respect to those areas. A1ternatively, the company may select "all risks" cover in the knowledge that the deductible will eff­ ectively exclude certain non-catastrophic perils.

The smaller, independent company frequently decides to insure for a full range of perils including those des­ cribed adequately. Such extended coverage could comp­ rise storm and tempest, typhoon hurricane and cyclone, riot, strike and malicious damage etc. .

4.4.5 Policy Wordings

There are no officially approved "Standard Policy

Wordings", for non-marine insurance of the hydrocarbon industry, since the broker would expected to negotiate an individual tailor-made policy to suit the oil com­ pany’s requirements.

Nevertheless such individual policies have to have a basis for discussion and examples of basic wordings are included as Appendices later in this project.

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At the very beging o-f the oil ear, its product pack­ ed in barrel, were shipped in ordinary cargo vessel, it was soon realized that pumpable liquid lent them­ selves to carriage in the hull of a ship.

The first vessel to carry a cargo of oil was the motor ship VANDERLAND in 1872. This ship was amodified gene­ ral cargo ship and, therefore, cannot be fully classi­ fied as the first real tanker. This prize of the first tanker fell to the vessel GILUCKAUF which was trading in the later end of the 19th century,now no other form of seagoing vessel is used for any normal movement of oil, and tankers represent a fith of total merchant tonnage of the the World.

Basically the insurance of oil cargoes and the requr- ements on the broker are no different from that any other cargo, in that the purdent broker adopting the the basic principles will ascertain the needs and the exposures of his client and will then advise the cov­ erage required and then will obtain the best possible deal in the market places of the world with total reg­ ard to coverage available, price to be paid and prob­ ably the most important facet, claims payments.

The duty of procuring cargo insurance depends on the terms of the contract of sales.

Only CIF contract that the procurement o-f cargo insu­ rance -falls upon the seller. Besides this the buyer has to procure an insurance covers by himself.