ECAP
ENERGY CLAIM ADJUSTMENT PROTOCOL
A quantum step forward in handling complex claims.
ENERGY CLAIM ADJUSTMENT PROTOCOL
• Indemnity based – Assured contracts repairs
• Team approach maximizes the proactive efforts of the
Assured and Insurers. Transparency of the process is
essential.
• American Petroleum Institute (API) Recommended
Practices form the agreed standards for damage evaluation
• The API Procedural format hastens damage assessment
and expedites repairs
• The use of agreed standards simplifies the ultimate
adjustment process.
AMERICAN PETROLEUM INSTITUTE
API Recommended Practice (RP) 579
• The ASME and API design codes and standards for
pressurized equipment provide rules for the design,
fabrication, inspection and testing of new pressure vessels,
piping systems, and storage tanks. …Fitness-For-Service
(FFS) assessments are quantitative engineering evaluations
which are performed to demonstrate the structural integrity
of an in-service component containing a flaw or damage.
API Recommended Practice (RP) 579
• The assessment procedures in this recommended practice can be used
for fitness-for-service assessments and/or re-rating of components
designed and constructed to the following codes:
• ASME B&PV Code, Section VIII, Division 1, Division 2
(Fired and Unfired Pressure Vessels)
• ASME B&PV Code, Section 1 (Power Boilers)
• ASME B31.3 Piping Code (Process Piping)
• ASME B31.1 Piping Code (Power Piping)
• API 650 (Oil Storage Tanks)
• API 620 (Low Pressure General Storage Tanks)
EXPEDITING ALGORITHMS
STEP 1 . ESTABLISH THE TEAM
• Agree on common goals. The intent of the Policy is to place
the Assured back in the position he was in immediately
before the loss.
• API standards provide independent guidelines for damage
assessment and repairs. Insurers agree to provide technical
expertise to implement the API procedures, in concert with
the Assured.
• Transparency is critical. All parties must cooperate to
achieve maximum benefit.
• Production of a common cause report is an important
intermediate goal. Subrogation/recovery may be possible.
STEP 2 . ASSESS THE DAMAGE
• Zoning: overpressure & heat exposure
• Prioritize vessel assessment schedule according to
applicable zoning criteria
• Place orders immediately for critical items located in
highest intensity damage zones
• Determine required repairs for vessels in lower intensity
damage zones
• Sub-systems (piping, instrumentation, controls) assessed
after critical vessels
• Investigate potential consequential effects to other units
“ZONES OF DARKNESS”
DAMAGE ZONE CRITERIA
STEP 3 . CHART REPLACEMENTS AND
REPAIRS, PREPARE FOR CLAIM
• Scope of work documentation for the selected EPC
contractor evolves directly from the API damage report.
• Order shorter lead time components (instruments,
controls, etc.), now that major items are in-process.
• Engage accountants for BI, if applicable.
• Consider potential milestones and magnitude of partial
payments.
• Collaboration as issues arise. “Betterment” issues may be
likely, but addressable.
STEP 4 . ADJUSTMENT/SETTLEMENT
• The Adjustment process is now almost an afterthought.
Seriously contentious issues have been avoided by the team
approach and use of agreed standards. By implementing
this approach, the loss itself is minimized to the greatest
extent possible. The Assured has retained control of the
repair (by utilizing their selection of contractor and using
their preferred engagement practices) and has been a
critical team member in the damage assessment. Insurers
have proactively engaged engineers and specialists to
accurately assess the damage and develop the scope of
repairs. Both parties reap the benefits of this precisely
structured, transparent approach to handling the loss. No
surprises!