Table of Contents
IC 57 FIRE | CHAPTER 11| Petrochemical Tariff|ONE LINER|PARA 13.2
Insurance exams offered by the Insurance Institute of India (III Exam), consist of various papers either in Life or Non Life or Combined. Here we are providing ONE LINER IC 57, Fire Insurance Chapter 11: Petrochemical Tariff for para 13.2 and III exam .These questions will be very helpful for upcoming promotional exam in 2020.
IC 57 / Fire Insurance is a very important topic in insurance promotional exam. This IC 57 / Fire Insurance paper comes in all GIPSA exams which makes it very important.
♦Chapter 11: Specialised policies and overseas practice
1. The potential risk of fire / explosion is of a high magnitude in a large complex where bulk quantities of highly flammable materials mostly in liquid, vapour and gaseous form are handled.
2. The first version of ‘Petroleum processing and Petroleum Refining’ tariff (now known as Petrochemical Tariff) was introduced in the year 1976.
3. The Petrochemical Tariff comprises:
- Rating procedure
- Application of loading and discounts
- distances between plants, plants and tank farms, utilities
- Mutual Aid Scheme
- Silent rates
- Regulations for electrical installation, fire and explosion protection system
4. Standard Fire and Special Perils Policy shall be issued to cover manufacturing risks, storage risks and miscellaneous blocks rateable under Petrochemical Tariff 2001.
5. Policy Can be issued to:
- Petrochemical plants
- Petroleum refinery plants including Sulphur Recovery
- Fertiliser plants with feed stocks like Naptha, Natural Gas,
- LPG bottling plants
- Urea / Ammonia synthesis plants
- Ammonia plant deriving its hydrogen supply by electrolysis of water
- Tankages, piping, utilities, auxiliary and miscellaneous buildings, loading and un loading areas situated in the premises
- Non-petrochemical plants located in petrochemical complexes.
6. Tariff is applicable to the following:
- For risks using Class A and / or Class B hydrocarbon / natural gas as basic raw materials
- Where the Total Sum Insured in one compound/complex exceeds Rs. 50 Crores and
- The sum insured of plant(s) using Hydrocarbon (Class A / Class B) /natural gas as basic raw materials is in excess of 35% of the total sum insured of the risk.
7. Types of risks excluded from the scope of Petrochemical Tariff:
- Plants where basic raw materials are not Hydro-carbon although the units constituting the plant may be manufacturing Hydro-carbon or further processing them to make a final product.
- Bottling Plant of LPG and similar materials located outside the refinery premises.
8. Minimum requirement for granting cover
- Fire protection Equipment’s with minimum condition of pumping capacity and discharge pressure and two hours water supply for the pumping capacity.
- **Non-petrochemical plants, which were constructed prior to 1.1.96 and do not comply with the above warranty may be exempted there from.
- All hazardous storage areas and tank farms should be protected by hydrant services.
- Electrical Installation throughout the premises to comply with the rules laid down by TAC.
- All process equipment and storage vessels should be continuously electrically bondedand grounded to give adequate protection against lightning and for safe dissipation of static discharge.
- All concrete structures and buildings and tankages should be adequately protected against lightning hazard.
- Appropriate warranties are to be inserted to ensure compliance with the requirements.
- The Petrochemical Tariff prescribes additional warranties.
- The premises’ in which the plant is situated is enclosed completely from all sides by fencing and/or boundary walls.
- All roads essential for fire-fighting around plant, tankages, storage area and utilities are of a minimum of 6m width
- The process in operation is a proven process with adequate experience in commercial production beyond pilot plant stage.
- **Proven process is a process in which chemical reaction involved and major equipment installed have been in operation on a commercial scale of same or higher size in at least one installation elsewhere in the world or the plant should have completed a satisfactory run of at least five years.
- No tank used for storing Class A and B products has a storage capacity exceeding 30,000 K. Litres.
9. Classification of Flammable materials
Class of products Flash Point
Class A Below and up to 230 C
Class B Above 230 C and up to 650C
Class C Above 650 C and up to 93 0C
Class D Above 930 C
10. In Petrochemical policy Discounts off the basic rates may be given for superior features if the given warrantees are complied.
11. Silent Risk is deemed silent only if all the hydrocarbon / flammable materials/combustible materials have been removed and it has been purged before the inception of silent period and would continue to be so throughout the silent period.
**The plant is thus completely empty of hydrocarbon / flammable materials/combustible materials and is completely out of use
12. The silent period excluding
- The period required to purge (to clean ) the plant.
- The period of start-up, shall at least a continuous period of 60 days.
13. The basic rate for each petrochemical plant is arrived at on the basis of the following factors:
- Properties of chemicals
- Quantity of flammable materials handled
- Type of each identifiable process / operation
- Temperature and Pressure
- Material of construction
14. Basic rate for process operation equipment is based on final process hazard factor from 1 to 5.25
15. Basic rate for process operation equipment is based on applicable material factor from 4 to 41.
16. For Storage Tanks; Utilities, Piping, Miscellaneous Buildings, LPG Bottling Plants and Non-Petrochemical Plants and Silent risks, separate rates are given in the Petrochemical Tariff subject to warranties for non-compliance.
17. Each equipment of the plant in a process unit is evaluated to arrive at the fire and explosion hazard factor.
18. The equipment with the highest hazard factor is identified as the basis for further loading for inferior features like absence of emergency power supply for critical equipment, and discounts for superior features like fire proofing of structural steel and equipment supports, fire protection systems etc.
19. The Fire and Explosion rate for each plant, after application of all loading and discounts, should neither be less than 65% of the basic rate nor shall it be more than 165% of the basic rate.
20. A loading is added to the Fire and Explosion rate to obtain:
- the package rate chargeable for the risks of Riot, Strike, Malicious Terrorism Damage, Aircraft damage & Impact damage.
21. Excess: The insurance does not cover 5% of the claim amount subject to minimum of Rs. 5 lakhs resulting from each and every loss in material damage insurance for all perils.
22. In Petrochemical policy excess is applicable per event and per insured.
23. While fixing discounts, the Committee will, in addition to amount of Voluntary Deductible Excess opted:
- take into account Maximum Probable Loss figures and Fire Protection and prevention measures.
24. The discount granted will be valid for a period of one year.
25. Insurer to reach HO, one month before the renewal/expiry of the policy.
26. The plants must be within 10 kilometer distance from the most distant point.
27. Following conditions must be follow for Mutual Aid Scheme Regulations
- A permanent office for the secretariat with necessary staff.
- A full-time permanent secretary having a back ground in Fire Fighting relevant to types of industries are included in the scheme.
- Call procedures in case of an emergency is laid down and frequent exercises and tests would be necessary.
- The members must have portable firefighting appliances, mobile fire pump of at least 4000 gsm capacity, fire hydrant system, stock of foam compound as per rule 7.8 of Fire Protection Manual.
- Fire and explosion safety of the plant and extension should preferably be checked every six months, but at least annually by using audit system and utilising check listswhere appropriate.
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