Heiko P. Wannick

Risk management for tunnelling projects

Catastrophic accidents in the course of tunnelling projects have been exerting a substantial strain on the international insurance industry since the 1990s. Major losses have led to contractors' all risks insurance for tunnelling projects becoming less and less attractive. The Code of Practice for Risk Management of Tunnel Works, which Munich Re played a major role in developing, aims to minimise the frequency and size of claims in tunnel works.

São Paulo, Brazil, 12 January 2007: The launching shaft and parts of the running tunnels beyond it at the future subway station Pinheiros collapse during construction work on underground railway line 4, increasing the diameter of the shaft from 42 to 80 m. According to press reports, seven people are killed. No official statement has yet been made on the cause of loss – an investigating committee is conducting an inquiry.

Since the early 1990s, no other area of the construction industry has been as adversely affected by major losses as tunnelling. Besides property losses often in the two-digit million range, third-party liability losses have also been high, and numerous people have lost their lives. The international insurance industry has made payments exceeding US$ 600m for large losses.

A variety of causes were responsible for the losses. Numerous collapses were attributable to instability of the ground. Some tunnels were damaged by floods or earthquakes while others were ravaged by fire in the construction phase. Many losses could have been prevented or at least mitigated if professional risk management concepts had been applied. It was thus a logical step for insurers and representatives of the building industry to jointly develop the international version of the Code of Practice for Risk Management of Tunnel Works in 2005. The aim was to introduce and implement sophisticated risk management measures in each project phase in order to avert loss events or minimise their effects.

continue »