Few could have been unmoved by the images of the Notre Dame Cathedral fire in Paris, which filled news bulletins in April 2019. The cathedral was under renovation at the time and, although the official investigation report is not due until 2020, speculation as to the cause of the fire has been rife. The latest view is that it could have been an electrical fault or perhaps even a discarded cigarette. Whatever the cause, the changed risk environment, introduced by the renovation work, will have been a contributory factor.

A recent article in Historic Churches magazine summarises some of the hazards that this renovation work probably introduced or increased, such as the presence of hot works, alternative electrical arrangements, the propping open of doors leading to reduced fire separation, disabling or altering alarm systems and increased smoking on site.

The fire started in the roof of the cathedral, where it found a tinder dry, massive wooden superstructure to feast on; a good alarm or sprinkler system could have nipped the fire in the bud – but alas the alarm was not fit for purpose and sprinklers weren’t fitted. Historic buildings are particularly prone to fires as they often contain a lot of wood and are not necessarily designed with fires or other hazards in mind; therefore, retrofitting of modern risk management systems is common.

Insurance for Energy & Infrastructure Sites

Whilst Notre Dame Cathedral may not seem relevant when considering energy infrastructure and its insurance, lessons can be learned from this fire (as they can from almost any other event during renovation or repair). It is important to remember that any project that is not part of the normal operation of a plant, such as a repair outage, plant renovation, or a life extension project, will materially alter the risk profile of the site; as such the work should be reported in detail to the site insurers. Crucially, cover may be denied if insurers are not notified of what is happening. Sites should expect to pay an additional premium to reflect the changed and increased risk profile that insurers face during a large project.

What sort of changes to the risk profile occur during construction, outage and major project work? Examples include reduced plant automation during outages, work in confined spaces, plant disassembly and assembly, performance of new or unusual tasks, working under time pressure and inevitable changes to the health and safety environment. However, the increased use of contractors and (often related) human performance issues are perhaps the greatest changes.

Case Studies

Two examples in the power sector offer demonstrations of the potential cost of human performance risk during projects:

  • On December 25th 2005, Unit 1 of Koeberg nuclear power station in South Africa was undergoing an outage. Due to poor cleaning controls, a bolt was left in a generator by mistake; when the generator restarted, extensive damage was caused and the ensuing delay in securing a replacement caused hundreds of millions of South African Rands in damage, to both the operator, Eskom, and to the city of Cape Town, which suffered power shortages for about 6 months afterwards. Although sabotage was at one stage considered a cause, ultimately this expensive event was established as a human performance issue.
  • More recently, in 2017, at Unchahar coal fired power station in India, following a troublesome commissioning of the new power plant, a catastrophic explosion caused by ash build-up and over-pressurisation resulted in the deaths of 47 workers. Whilst the plant owner and the operators were all experienced, the plant was relying on visual ash inspections and was operating under time pressure – both dangerous ingredients that can magnify the risk of human error.

Both events were insured, but the message is simple: recognise the changed risk profile caused by any project, big or small, and discuss its implications with its insurers; this will help prevent misunderstandings and perhaps ensure that a claim is not denied.

About the Author

Mark Tetley has wide experience gained from senior positions across the London insurance market as both an underwriter and a broker , in a variety of sectors. He provides advice and assistance on a wide range of insurance and risk issues, including comprehensive nuclear liability and property insurance assistance, complex infrastructure project programme design and review, claims and policy reviews, assistance with project insurance design and implementation in developing countries, and many other aspects of risk mitigation.

Prospect Law is a multi-disciplinary practice with specialist expertise in the energy and environmental sectors with particular experience in the low carbon energy sector. The firm is made up of lawyers, engineers, surveyors and finance experts.

This article remains the copyright property of Prospect Law Ltd and Prospect Advisory Ltd and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

This article is not intended to constitute legal or other professional advice and it should not be relied on in any way.

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