Case Studies
A gas turbine at a 1,600 MW power plant tripped due to a flash-over in the turbine end stator windings of a Siemens generator. The turbine was non-operational for almost 10 months, resulting in a 400 MW loss of capacity during the rotor and stator repairs with equipment shipped to the OEM in Europe for rewinding.
The combined property damage (PD) and BI claim was approximately $50M. We worked with the insured’s representatives to refine the BI calculation based on the Loss of Capacity Revenue as defined by the power purchase agreement. The indemnity period overlapped the summer, winter, and another summer in two separate contract years with different scheduled outages, deductions, and forced outage allowances, which added to the complexity of the measurement. Our team undertook a detailed analysis of the capacity invoices, including the hourly availability data and outage modes (taking into account the availability of the balance of the plant). We also reconciled the capacity revenues to the financial statements to ensure the reliability of the availability spreadsheets as a basis of calculation. We performed a high-level calculation of a full plant shutdown and an assessment of the summer penalties to confirm the adequacy of the sum insured and compliance with the sub-limits. We understand that J.S. Held’s estimate was agreed upon as the final settlement amount.
Additionally, we assisted the adjuster in collating the PD invoices and monitoring the costs incurred. Salvage was also accounted for concerning the copper wire (although this is coated with resin and needs to be manually stripped for further processing, meaning the residual value was quite low). We also observed that the deductible in the reinsurance policy was $1M as opposed to $750K in the local policy issued to the insured. There were also differences in coverage regarding claims preparation and brokers’ costs. J.S. Held also administered the fee fund concerning loss adjusters’ and experts’ fees for the project’s duration.
Daniel Thorpe
Executive Vice President
Forensic Accounting - Insurance Services
+971 56 658 3620
[email protected]
> Business Interruption / Lost Profits
We provide specialized expertise in the quantification of damages related to claims and disputes involving business interruption and lost profits. Our team combines their financial expertise and diverse backgrounds to effectively evaluate the insured's/claimant's operations and industry/market-specific factors, to quantify interruptions and lost profits.
> Forensic Accounting
Our Forensic Accounting Practice includes Certified Public Accountants, Certified Fraud Examiners, Certified Financial Forensics experts, and other financial experts who specialize in financial investigations, dispute resolution, and regulatory compliance. We deliver the truth behind the numbers in financial matters involving insurance claims and disputes, business interruption/lost profits, cyber damages, Delay in Start-Up (DSU) / soft costs, extra expense, family disputes, fraud, labor & employment disputes, personal injury damages, and bankruptcy/insolvency.