Joint Rig Committee

SO, WHAT IS THIS FUMA THING THAT YOU

ARE HEARING ABOUT ???

Paul Millen
Underwriter , Berkley Offshore Underwriting Managers
Doug Humberstone
Underwriting and Claims Manager, Lloyds Market
Association
on behalf of
MARIN 32nd JIP Week
26th March 2014

JOINT RIG COMMITTEE - What is it?

An elected body of Marine Energy 14

underwriters drawn from:
the Lloyds Market Association
the International Underwriting
Association.

Joint Rig Committee Terms of Reference

A forum for the London Marine Energy Market which:
Discusses common issues or concerns.
Promotes the best principles and practice of Marine
Energy Insurance
Initiates projects or sub-groups where appropriate to
address specific issues.
Supports the LMAs provision of advice, information and
technical services to the Marine Energy Insurance
Community.
Communicates with Marine Energy Insurers on issues
including the its ongoing work and that of its subcommittees and working parties.

A CORE PROPOSITION OF UPSTREAM ENERGY INSURERS

Marine Energy Insurers seek to understand , support and,

where possible, add value to their Assureds existing
Risk Management and Risk Reduction processes.

HOW DO WE DO THIS?
Through third-party application of defined Survey and
Assessment processes
For Example

Construction
Construction
Drilling
Drilling Rigs
Vessels

Marine Warranty Survey

Yard Audits
Well Plan Review
Move Surveys
Towage Surveys

Constructive and informative processes of mutual

benefit

WHY WERE THESE PROCESSES CREATED?

A wish to understand ever-changing technology / risk

profiles

Enable Insurers to deliver better products

A response to recent events

HOW WERE THEY CREATED?

Consultation between:
The Joint Rig Committee
Industry experts (third-party engineers / surveyors)
Industry bodies / associations
To ensure they are:

Reasonable
Relevant
Practical
Value Adding

SO WHAT ABOUT MOORING INTEGRITY?

Insurers had relied on Classification Societies and

Operators to ensure system integrity.
The JRC mandated the Engineering Sub-committee to
investigate the need for & development of a formal
process for the assessment of Mooring Systems

WHAT HAD CHANGED?

Increased awareness that that the Asset Base is

Increasing
In Numbers
In Size
In Value
In complexity
Facing new environmental challenges

Ageing

WHAT HAD CHANGED?

Awareness of :
Increasing frequency of

General Mooring System failures

Premature failures

Increasing quantum of Insured Losses

WHAT HAD CHANGED?

2001 to 2011
23 documented mooring failures
8 of which were systems failures (multiple line
damage and drifting)
Of these 4 with riser failure
Suggests a systems failure rate of 3.0 x 10-3 , an
order of magnitude worse than industry (DNV)
guidelines
Source: OTC Paper 24025

WHAT HAD CHANGED?

Failure trends?
Analysis of recent incidents
shows
A shallow U-curve
High failure rates during
early life
Reduction towards mid-life
Increasing end of life
failures

(Source: OTC Paper 24181)

ONCE WE STARTED TO LOOK

we saw that we wanted to better understand the many

factors which can affect mooring systems
Not least
Mooring Integrity Management Processes

Operating Standards

AND

Lifetime Extension Processes

Classification Societies

Uninspected Desk Top class extensions

Inconsistency of Rules
Variable application of own rules

Variable Capability

UNDERWRITERS CONCLUSIONS

There were gaps in our understanding

Operating and Maintenance standards are variable
Class is variable
Be better informedand promote risk reduction for
Insurers and Assureds alike.
A formalised Assessment Process was the best way
forward

ESTABLISHING THE CORE VALUES OF THE NEW PROCESS

IT SHOULD BE:

Inclusive and promote dialogue with assureds)

Discretionary or voluntary
Flexible / risk appropriate
Relevant / standards-based
An underwriting tool
Value-adding for assureds

ESTABLISHING THE CORE VALUES OF THE NEW PROCESS

It should generally enhance understanding of the

Various types of mooring systems and the differing
associated risk
Various international codes for mooring system
design and operation , installation and integrity
management
Lifetime Extension process
Condition, operational experience and integrity
management of specific systems
Suitability, pre-installation, of a specific system

HOW WAS IT DRAFTED?

We followed well-trodden , proven paths

A document structured consistently with other JRC survey
documents e.g. CAR MWS / Well Plan

Guidance Notes
Endorsement
Code of Practice
Workscopes

HOW WAS IT DRAFTED?

Consideration was given to known

International Standards
Design Codes
Codes of Practice
Operation Codes
Integrity Management Systems
Industry Best Practice
Defined Safe Operating Limits

Drafting and Consultation

JRC Engineering
Sub Committee

JRC

Oil & Gas UK

(including
Mooring
Integrity
working group

MWS

3rd party
Engineers

OUR THANKS TO

The Oil & Gas UK Mooring Integrity Workgroup for their

engagement
Design
Installation
Root Cause Analysis

AND THEN

The JRC Engineering Sub-Committee delivered

its process for
Floating Unit Mooring Assessment

FUMA

HOW SHOULD FUMA BE APPLIED?

Intended for use with Moored Floating Units OTHER
THAN MODUs
Application is Discretionary and/or Voluntary
There is an INITIAL SCREENING PROCESS (ISP) which may
indicate FUMA is NOT REQUIRED

If ISP indicates need for FUMA application it is a tiered

process
Technical or Physical
Remote or Attended

How Should FUMA be applied?

Level One

Technical; Remote; Desk top & Correspondence

Audit based process

Level Two (a)

Technical; Attended; Onshore

All level One
Assessor attendance of assureds mooring integrity management location

Level Two (b)

Technical; Attended; Onshore/Offshore

Level One PLUS assessors attendance of assureds mooring integrity
management location

Level Three

Inspection / Engineering
Visual inspection (but not without prior or simultaneous application of
TECHNICAL: Levels 1 and 2a)

Level Five

Inspection / Engineering
Enhanced visual inspection and characterisation (but not without prior or
simultaneous application of TECHNICAL: Levels 1 and 2a and INSPECTION
/ENGINEERING Level 3

HOW SHOULD FUMA BE APPLIED?

Mooring Assessors ; Selection and Appointment
Any party(ies) on which Insurers and Assureds may mutually agree
Insurers to propose (wherever possible) a panel of potential Assessors
Assured to select its preferred Assessor from the proposed panel
Assessors may include
An Insurers internal engineering capability
A third-party e.g. a Marine Warranty Surveyor or a specialist engineer

AND THEN

The workscope is applied

The Assessor delivers its findings to the Assured and

the Insurers

FUMA & OTHER JRC SURVEY PROCESSES

A VITAL DIFFERENCE
FUMA IS NOT A WARRANTY DOCUMENT

LIKE JRC CAR MWS / Well Plan Review

FUMA provides for Assessors to make recommendations.

UNLIKE JRC CAR MWS / Well Plan Review

FUMA does NOT make provision for Assessors
Recommendations to automatically become Warranties,
breaches of which might invalidate coverage.
Conversion of Assessors Recommendations to Conditions,
Subjectivities or Warranties requires action by an
Insurer.

And Finally

We seek to UNDERSTAND but NOT to DICTATE

We believe our Risk Survey / Assessment
processes add value in other categories of risk

We believe the same can be true for Mooring

System Integrity Management

Thanks for your attention and

www.lmalloyds.com/underwriting/jrc