1. UNDERWRITING & LOSS CONTROL
IN COMBINED CYCLE POWER PLANTS
PRESENTED BY Sudhindra B. Kodagali
Senior Underwriter
Property & Engineering

2. Objectives
● Combined Cycle Power Plants
● Introduction – Trends, Advantages, Working cycles
● Underwriting considerations
● Loss Control
● Insurance covers
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3. Increased Deployment of Gas Turbine
Technology in Power Plants
● More private operators due to liberalization
● Increase in gas production world wide and
development of Gas Turbine technologies
● Increasing need to find environmentally friendly
methods of power generation
● IT development allowed better control and accounting
record of complicated power flows
● Development of new techniques in transmission and
distribution of Electric power by creating national and
International networks
● Drop in prices of GTs due to strong competition
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4. Preference for Gas Turbine Power Plants
● Low initial costs compared to other types of power plants
● Less space requirements
● Less time required for installation
● Increased unit capacity due to technological
developments
● Increased efficiency
● Low maintenance costs, though operational costs are
higher
● Higher reliability
● Low NOx emissions
● Increased fuel spectrum
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5. Section of Gas Turbine
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6. Types of Gas Turbine Plants - Simple
Cycle
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7. Types of Gas Turbine Plants - Combined
Cycle
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8. Main Manufacturers of
Large Combustion Turbines
Europe : Siemens and Alstom
North America : GE and Siemens
Japan : Mitsubishi
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9. Underwriting Considerations
● Continuous Product Development: Lead to increased
power plant risk exposures. Firing temp and compression
ratios are being increased to achieve higher efficiency
● Firing temp levels directly affect operating metal temp.
Latest models of ‘F’ and ‘G’ class turbines operate at
300 to 400 degrees firing temp more than previous ‘E’
class turbines,
● Prototype Models: Regular upgrade developments of Gas
Turbines made it difficult to distinguish a prototype model
from a proven model.
A GT to be judged as prototype as long as the first model
of the series has not reached 8000 hours of trouble free
operation. Higher deductibles to be applied for covering
manufacturer’s risk
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10. Underwriting Considerations
● Operating Conditions: To check whether GTs are operated
under standard conditions like use of special fuels, new
elements leading to increased efficiency
● Quality of fuel
● CAT exposures
● Operating Cycles: Base load and peak load. Peak load
station with frequent starts and stops is subject to
extensive thermal fatigue
● Risk management practices: Fire fighting systems to be
operational before commencement of testing
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11. Underwriting Considerations
● Completion Date Monitoring (ALOP): Periodical
monitoring of work progress program and assessment of
actual date of commissioning in case of ALOP cover
● Parts of Limited Life: Items like turbine vanes and blades
to be subject to depreciation (Mre 333)
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12. Loss Analysis and Control - Causes
Losses are classified in to three categories of causes by
International Machinery Association:
● Design faults: About 35% of all loss repair costs are in
respect of Prototypes of new models or components.
Design cover has to be selectively given. LEG 3 to be given
for proven models.
● Human Errors: This depends on quality of
staff, management and implementation of quality and
process regulations. These failures are estimated to
produce 50% of losses.
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13. Loss Analysis and Control - Causes
● Operational losses: Losses caused by faulty
operation, natural disasters, fire, wear and tear. Approx
15% of losses are attributed to this category and this could
be improved by good plant design, automatic diagnosis
program routines and good fire fighting system installation
before commencement of Testing phase.
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14. Loss Analysis and Control - Prevention
1. Use of risk based maintenance and inspection programs
● Combustion inspection,
● Hot gas path inspection,
● Major overhaul,
2. Use of proactive maintenance schedules
3. Diagnostic monitoring
● Vibration analysis,
● Thermography,
● Endoscopy
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15. Conclusion
● The demand for insurance protection would increase in the
coming years
● The level of rating to be set at adequate levels to at least
cover the burning costs, CAT loss reserve and admin costs
● Careful approach is required to cover manufacturer’s risk
specifically for models not satisfactorily proven. For wider
covers we adopt very high deductibles for testing and
commissioning risks,
● Higher preventive maintenance standards to be applied.
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16. Thank You
Sudhindra B Kodagali
Senior Underwriter
Property & Engineering
skodagali@trustre.com
(973) 17517195