Transcript Document

RAILTRACK
Presentation to
Liability Underwriters Group
Conference 4 September 2002
Ian Thompson
Head of Insurance & Risk Management
Railtrack PLC (In Railway Administration)
RAILTRACK
Summary
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Overview of industry structure/Railtrack
Risk Management processes
Key risk statistics
Why has there been incidents?
Industry insurance arrangements
Claims Management
Conclusion
Discussion / Q&A
RAILTRACK
Britain’s New Railway Industry
SRA
Rolling stock
companies
ROSCOs
Passenger
train
operating
Rail Regulator
co.s (TOCs)
Open access
operators
e.g. Eurostar
Heavy
maintenance
suppliers
Freight
operators
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owns the railway
infrastructure
Infrastructure
maintenance
companies
(IMCs)
Track
renewal
companies
(TRCs)
Other service
providers
e.g. telecoms
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RA I LT RA C K
The heart of the railway
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Railtrack Owns
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20,000 miles of track, signalling and
electrification
2,500 stations
90 depots
40,000 bridges, viaducts and tunnels
9,000 level crossings
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Railtrack’s Objectives
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Maintain/improve safety
Improve network operation/reliability
Maintenance & renewal of infrastructure
Plan & execute major capital
programmes
Heavily regulated
Currently in administration
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Risk Management Process
• Corporate Governance
• Safety risk Management
• Insurance modelling
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Corporate Governance
(Continuous Process)
Goals/Objectives/Standards
Response to
crisis
Risk Review
Group
Monitor &
Control
Evaluate & improve plan
Assess &
identify risks
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Railtrack Has
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Commitment from board level
Risk policy statement
A senior level risk review group
Framework for risk assessment
Top down risks culture initiative
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Key Risks
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Regulatory/political
Reputation/finance
Multi-fatality accident
Failure of suppliers
Strategy
Key people
Operational risks
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Safety Role of Infrastructure
Controller
• Railway Safety Case Duty Holder
• Proactive management of risk to the
National Network (including imported
risk)
• Monitoring and review of TOC and FOC
Safety Cases
• Management of capacity, safety &
performance
• Contribution to Railway Group Safety
Plan
ORGANISATION
FOR SAFETY
BOARD
SAFEX
ZONE COMMITTEES
CONCEPT PRIORITIES
STRATEGY RESOURCES
COORDINATION
ENVIRONMENT
CATASTROPHY
RISK
EFFECTIVENESS
PEOPLE
PRODUCTION
AREA
CO-ORDINATORS
MANAGEMENT
ALL EMPLOYEES
AUDIT
SAFETY
EVALUATE
EXPERTISE
DESIGN
COMMUNICATION
LEADERSHIP
DEVELOP CAPABILITY
IMPLEMENT STANDARDS
SAFETY MEETINGS
SAFETY TRAINING
SYSTEM SAFETY
CONTINUOUS IMPROVEMENT
COMMUNICATIONS
Contractor Assurance
Key
Performance
Indicators
LinkU Assuranc H&S
p
e Case
Plan
Analysis on
Contractor Contractor
Assurance Performanc
e
Action by
C&S on
Contracto
r
Monitoring
and Audit
Programm
e of Audit
Database
of
informatio
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Insurance Modelling
• Modelling of Key insurable exposures
• Risk Management Surveys
• EMLs - Property £375m
- Business Interruption £200m
- Liability £140m
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Key Risk Statistics
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Train Accident Precursor Indicator
SPADs
TPWS risk reduction and rollout
Track Quality
Broken Rails
Maintenance and Renewal Spend
Train Delays
Train Accident Precursor indicator.
Accident Precursors
800
7600
Total Precursor
Events
700
7400
600
7200
500
7000
400
6800
300
6600
200
6400
100
6200
0
6000
P1
P2
P3
P4
P5
P6
P7
P8
P9
P10 P11 P12 P13
P1
P2
P3
P4
P5
2000/2001
P6
P7
P8
P9
P10 P11 P12 P13
2001/2002
Accident Precursor Data 2001/2002
Precursor
Category A SPADs
Level Crossing Misuse
Broken Rails
Irregular Working
Rolling Stock Failures
Environmental Factors
Total
Risk weighting
32.84%
22.84%
12.86%
8.31%
8.00%
6.07%
90.92%
P1
34
142
46
289
5
6
522
P2
48
158
28
233
2
5
474
P3
35
134
23
250
1
15
458
P4
45
142
21
286
13
13
520
P5
46
140
16
275
4
10
491
P6
30
150
22
245
10
11
468
P7
36
120
36
251
6
5
454
P8
29
118
49
247
4
10
457
P9
41
90
66
277
5
17
496
P10
26
61
87
173
2
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351
Risk Number
Events
13 Period Weighted
Average
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Annual Category ‘A’ SPADs
Annual Category 'A' SPADs
773
800
724
686
677
700
633
590
N umber of SPADs
600
472
500
434
400
300
200
100
0
1994/95
1995/96
1996/97
1997/98
1998/99
Financial Year
1999/00
2000/01
2001/02
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TPWS Scope
TPWS is designed to reduce the consequences of a
signal passed at danger (SPAD) and will be fitted at
vulnerable locations on the network in accordance with
the Railway Safety Regulations, 1999.
This will involve fitting:
• Around 11,000 signals
• Over 700 buffer stops
• Approximately 2,700 permanent speed restrictions
Signals complete and operational by end of 2002
All fitments complete and operational by 1 January
2004
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TPWS Benefits
• TPWS will prevent over 70% of accidents due
to signals passed at danger.
• TPWS will also reduce the risk of:
- Derailment due to train over speeding
- Collision with buffer stops
• TPWS will save an average of 1.6 lives per
year
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TPWS Implementation
• 8298 signals commissioned (77% complete)
• 446 buffer stops commissioned (66% complete)
• TOC progress on their fleet installation 65-70%
complete
TPWS is being successfully delivered to programme
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Absolute Track Quality
94/95
95/96
96/97
97/98
98/99
99/00
00/01
01/02
6.0
N ational AT Q since 31/3/94
5.5
5.0
4.5
4.0
3.5
3.0
2.5
2.0
13 1 2 3 4 5 6 7 8 9 10 1112 13 1 2 3 4 5 6 7 8 9 10 1112 13 1 2 3 4 5 6 7 8 9 10 1112 13 1 2 3 4 5 6 7 8 9 10 111213 1 2 3 4 5 6 7 8 9 10 1112 13 1 2 3 4 5 6 7 8 9 10 1112 13 1 2 3 4 5 6 7 8 9 10 1112 13 1 2 3 4 5 6 7 8 9 10 1112
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Number of Broken Rails on the National Rail
Network per Year
952
919
1000
900
755
N umber of Rail Breaks
800
709
706
700
534
600
500
400
300
200
100
0
1996/97
1997/98
1998/99
1999/00
Year
2000/01
2001/02
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Railtrack Spend on Maintenance &
Renewals
4000
3654
3500
Average BR
Spend
Spend
2963
3000
Budget
2299
£million
2500
1775
2000
1959
1581
1335
1500
1000
1860
700
500
0
Average
BR spend
1995/6
1996/7
1997/8
1998/9
Year
1999/00
2000/1
2001/2
2002/3
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Railtrack Delays by Week
2001/02
Railtrack attributed delay by week 2001/2 - Week 52
450,000
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
Railtrack Direct
4 Weekly RT Average
Week 51
Week 49
Week 47
Week 45
Week 43
Week 41
Week 39
Week 37
Week 35
Week 33
Week 31
Week 29
Week 27
Week 25
Week 23
Week 21
Week 19
Week 17
Week 15
Week 13
Week 11
Week 9
Week 7
Week 5
Week 3
Week 1
0
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Summary
• Lowest SPADs on record
• SPAD risk will reduce further with TPWS
rollout
• Track quality 50% improvement
• Reduced broken rails
• Increased maintenance & renewal spend
– ALL DURING A PERIOD OF
SUBSTANTIAL GROWTH IN TRAFFIC
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Why has there been
incidents?
• The incidents
• Comments
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Recent Railway Incidents
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Watford
Southall
Ladbroke Grove
Hatfield
Heck
Potter’s Bar
8 August 1996
19 September 1997
5 October 1999
17 October 2000
28 February 2001
10 May 2002
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Comments
• A “risk free” railway is not possible
• Assets/Structure inherited at
privatisation/change
• Incident frequency has not increased
• Incident costs have increased – interindustry costs
• Reputation/litigation risk
• SRA 10 year plan / Network Rail
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Industry Insurance
Arrangements
• SRA requires £155m liability cover
• TOCs/Contractors buy through industry
facility
• Railtrack buy stand-alone cover
• Is there a better way?
• Long term relationships?
• Management of Contractors
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Current Difficult Areas
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Small Contractors
Employers Liability
Professional Indemnity
Good claims record – a problem of
perception rather than reality
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Railway Claims Management
(1)
• Claims Allocation and Handling Agreement (CAHA)
• CAHA objectives
- Ensure claimants not prejudiced by
disaggregation
- minimise industry costs
• CAHA principles
- pre-allocated liability for TP &EL claims
below threshold
- inter-industry claims restricted for property
damage and consequential loss.
• CAHA process
- early appointment of “Lead Party” to
manage incident /claims
- Strategy /authority agreed with “Potentially
Liable
Parties”
- Allocation of liability agreed later through
internal
industry dispute mechanism or
court
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Railway Claims Management
(2)
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CAHA Benefits:Pro-active response
Industry cohesion
Single point of contact
Reduce industry claims handling / legal
costs
Dirty linen not washed in public
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Overall Conclusions
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Extensive industry effort to manage risk
Improving key risk statistics
Incident frequency no worse
Consider alternative insurance
structures
• Address poor perception of railways
• Pro-active management of claims
• Now is a good time to underwrite rail