ExTool

An account is up for renewal and lands on the underwriter's desk. The broker suggests a maximum possible loss (MPL) of $38 million for damages to the account holder's refinery. But our tools estimate losses of up to $260 million. A string of meetings clarify the matter – time pressure mounts, and the renewal approaches. The insured is upset to learn that his exposure is actually much higher than expected. So does he need to buy more cover? 

With the introduction of ExTool to the insurance market, such confusion has become a thing of the past. Renewals are now faster. And basic assumptions about risk exposure have been standardized across the industry.

Overview

Explosions are often the primary cause of major incidents in the oil and petrochemical industries.  They have a high loss potential because they either process and store large amounts of flammable materials or run under extreme processing conditions. Given the trend in the process industries towards even larger, more complex and integrated installations, these loss potentials are likely to increase in future. It is therefore in the interest of all parties concerned with risk — namely insured, insurers, reinsurers and authorities — to be able to estimate the consequences of a major explosion event.

Using TNT explosion models, ExTool offers a conceptually simple but highly transparent means to draw up such estimates. It has proven to be particularly valuable in cases where the risk of losses from catastrophic explosion is high. Designed to run on Microsoft Windows, ExTool simulates explosions in spaces made up of open steel structures, such as refineries and other industrial processing sites. ExTool also simulates tank fires and liquefied natural gas (LNG) spills, and it calculates flash fractions and vessel volumes. ExTool‘s reputation for excellence and reliability are commensurate with what clients expect from Swiss Re.

Scope

ExTool provides the user with transparent and easy-to-use models to assess damage potentials associated with vapour cloud explosions (VCE) and ruptures of high-pressure equipment (HPR). The models can either be used to estimate the strength of a VCE or an HPR. Combined with a distribution of property values from the process plant in question, it can also yield an explosion loss estimate in monetary terms.

Although explosions may have severe consequences for exposed personnel, ExTool focuses on damages to property only. It provides key information to readily:

• assess the potential strength of an explosion
• assess the severity of a tank fire
• estimate evaporated mass from a refrigerated hydrocarbon spill, such as an LNG spill
• draw sites, scan or import drawings, with a distribution of their known monetary values
• determine monetary losses caused by an explosion, and extrapolate maximum possible loss (MPL) from those figures
• visualise results in a variety of meaningful ways
• provide flexible tools for event documentation

How ExTool works

The energy content of either a VCE or an HPR are converted into an equivalent mass of TNT. From this TNT mass, radii corresponding to certain levels of overpressure can be calculated. ExTool uses three such radii, correlating overpressure with average damage levels of 80%, 40% and 5% respectively. Finally, the circular damage areas can be combined with a distribution of values for the plant in question.

Conclusion

In combination with sound risk engineering judgement, Swiss Re’s ExTool offers the basic facilities for obtaining reliable and reproducible evaluations of loss potential arising from explosions.