“Basic Coverage for Equipment Used in the Production, Drilling and Exploration of Oil and/or Natural Gas in Marine Operations (offshore) and Land (onshore) – Special Conditions (…) Clause 2 – Risks not Covered and downs Indemnified/ 2.1. In addition to the provisions in clause 5 of the General Conditions, are excluded from coverage claims for indemnification for losses, damages, expenses, or other costs resulting directly or indirectly from the following events: (…) j) natural wear for the use (including abrasion, friction, deterioration or encrustation by boiling machinery, plant or equipment as a result of use or daily operation), gradual deterioration, including any effects or weathering, oxidation, rust, flaking, scale, cavitation and corrosion of mechanical, thermal or chemical origin“.
The excerpt of the policy “Oil Risk Insurance”, from Tokio Marine Insurance Company (in a free translation from Portuguese), makes clear a practice of the insurance industry: not to pay for insurance arising from corrosion events. And the “Special Conditions” for pipelines and offshore platforms also list corrosion as a “risk not covered and downs indemnified”. “All risks of incalculable probability over which the insurer has no estimate capacity are not covered by insurance policies”, explained recently the executive of a reinsurance company to PhDsoft CEO, Duperron Marangon.
In fact, nowadays,
corrosion is a predictable phenomenon
In Brazil, where PhDsoft won its first clients, the insurance company Porto Seguro requires hiring a tracker that allows the location of a car in case of robbery or theft to vehicles of value from R$ 200,000 (link in Portuguese). “It’s the same logic that we are seeking to bring to the oil industry. Despite of deep water exploration in Brazil, no accidents that can harm the environment as much as the one with the BP offshore platform, in the Gulf of Mexico, has happened and this is partially due to our software PhDC4D®. We explain it as a comprehensive system resulting from the synergistic integration of a 4D-space-time visualization with a predictive corrosion algorithm, a regulatory code compliance engine and automation of engineering activities and best practices. This consolidates a safer and cost effective maintenance process”, states Marangon.
In fact, nowadays, corrosion is a predictable phenomenon. There are only few corrosion processes that any intelligent solution would have difficulty to deal with. Pitting – a form of extremely localized corrosion that leads to the creation of small holes in the metal – is one. Since PhDC4D allows companies to monitor corrosion conditions and its evolution, insurance policies could start to cover corrosion caused accidents. That is technological disruption uniting two very traditional sectors in a win-win relationship for everybody.