Canadian Underwriter

Chemical and oil/gas industries represent key industrial risk: Munich Re

March 7, 2005   by Canadian Underwriter

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In its latest Schadenspiegel publication, Munich Re looks at some of the most significant industrial disasters in history and finds significant exposure coming from the chemical and oil/gas sectors.
Data from European countries shows the majority of industrial incidents reported come from these sectors – the "Major Accident Reporting System" (MARS) finds 20% of incidents reported occurred at petrochemical plants, while 50% were at chemical plants. "Chemical and oil and gas plants and storage facilities are therefore the plants most frequently affected by incidents, as might be expected in view of the large quantities of toxic, highly flammable, and explosive hazardous substances that are stored and handled in processing units there," writes Munich Re’s Stefan Hackl.
"Spread models" show a release of toxic gases can potentially kill thousands of people within a 10 kilometer radius. 2004 represents the 20th anniversary of one of the most serious and deadliest such events – the release of 30-40 tonnes of methyl isocyanate from a Union Carbide plant in Bhopal, India in December, 1984. The gases reached 30 kilometers, with more than 2,000 killed immediately, and over 20,000 deaths eventually blamed on the incident, as well as hundreds of thousands suffering chronic illness. Union Carbide paid a US$470 million settlement in 1989, with insured liability losses of US$200 million.
Computer simulations of chemical and petrochemical plant explosions indicate fatalities could be caused within a 400 meter radius as a result of building collapse, while flying debris could reach up to one kilometer away and window panes broken as far as 20 kilometers away. This kind of devastation was exemplified by the 2001 fertilizer plant explosion in Toulouse, France. In that case, 400 tonnes of the fertilizer ammonium nitrate exploded, leaving 30 people dead, 2,240 injured and severe property damage within a 350 meter radius. The economic loss from the Toulouse incident is estimated at EUR2.3 billion, while insured losses were EUR1.93 billion.

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