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LONDON BRIDGE IS FALLING DOWN

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Open-access content 22nd February 2019

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The collapse of a bridge in Genoa with such catastrophic consequences has reawakened concerns around ageing infrastructure across the world, with the UK being no exception. We take a look at the risks-¦

It is a pretty bleak picture: one in nine bridges in the US are reported to be structurally deficient, while in the UK more than 2,000 bridges are not suitable to carry the heaviest vehicles now on the public highway.t is a pretty bleak picture: one in nine bridges in the US are reported to be structurally deficient, while in the UK more than 2,000 bridges are not suitable to carry the heaviest vehicles now on the public highway.

In Italy, where a bridge collapsed in Genoa in August last year, the World Economic Forum warns some 300 bridges are at risk of collapse.

According to a new report from Willis Towers Watson: "Asset deterioration is increasing due to heavier vehicles, higher traffic volumes and faster speeds; trends which are global in nature.

"The result is that bridges designed more than 40 years ago are now coping with very different demands -- known as unforeseen use -- and [that is] one of the main causes of bridge failure."

Make a short trip around any major city and the bridges, roads, railways and tunnels undergoing maintenance and repairs bear witness to infrastructure assets being pushed to their limits.

According to the Willis Towers Watson report: "In the last 50 years, the permitted weight of goods vehicles on UK roads has increased to 44 tonnes. Asset deterioration increases with heavier vehicles, increased traffic volumes and higher speeds; trends which we observe globally.

"Similarly, assets that were built to comply with less stringent safety standards than we expect today continue to play a fundamental role in our daily lives. Bringing those assets up to date carries inherent risks -- both during maintenance and upgrade works and also during the remaining life of the asset."

UK risksLate last year, the UK's National Infrastructure Commission also produced a report highlighting the many risks that exist across the UK.

It also warns that, too often, the delivery of the UK's major infrastructure projects has been slow and uncertain. It says:

  • Airport expansion in the southeast is the best known, but not the only, example;
  • The Mersey Gateway Bridge, which opened in October 2017, was first proposed in 1994;
  • Crossrail, due to open in 2019, was originally proposed in 1974."Consequently," it notes, "much of the country's infrastructure has not kept pace with population growth, demand and advances in technology. The UK must stop running to stand still."

At the end of January, the House of Lords EU financial affairs sub-committee echoed findings by the National Infrastructure Commission, of the need for a new financial institution for infrastructure investment.

Providing further evidence of the scale of the problem, the National Infrastructure Assessment recommended that cities should be given long-term infrastructure budgets and the opportunity to develop bigger projects where required, to support their plans to boost job opportunities and deliver homes. To deliver this, local leaders in cities need an extra £43bn of investment by 2040.

However, Joanne Foley, director of global infrastructure at Willis Towers Watson, says: "It's not just wear and tear that affects the suitability of older infrastructure assets for modern demands.

"Changing needs place stresses on infrastructure that may not have been considered when they were first designed and built. We help and encourage clients to fully understand their asset portfolio and implement practical plans to safely manage their economic assets now and in the future."

She suggests: "By regularly reassessing the risk profile of their assets, infrastructure companies can fully understand and safely manage their economic assets now, and in the future, through a combination of risk mitigation and risk transfer."

POLLUTION RISK

Although the collapse of the Genoa road bridge highlighted the very real risk to human life, there are other risks that follow a catastrophic event -- not least of which is pollution.

As governments increasingly look to penalise those involved with polluting the air, waterways or the ground, those involved in building these major infrastructures have to look both back at past issues and forward in the way they plan the next construction.

AIG's environmental impairment liability (EIL) claims intelligence report cites a rise in fire-related environmental damage claims and losses relating to improper construction and demolition (C&D) waste management practices.

It lists construction in the top three industries for notified EIL events.

It further warns: "More claims are arising as a result of substandard management practices in the handling of construction and demolition waste.

"The trends reflected in EIL claims in the past 12 months once again demonstrate that insureds' environmental exposures are far from static. They are set against an evolving risk landscape and increasing regulatory pressure across Europe to carry out inspections and make the polluter pay."

The report warns that construction showed an almost doubling of loss incidents from 5% in 2016 to 9% in 2017 and suggests the biggest issue for this sector at present is inadequate waste management processes. Losses associated with waste management activities (across all industry segments) accounted for 11% of AIG's 2017 notifications.

"Worldwide investment in infrastructure is expected to be $79trn by 2040. However, the actual global investment need is closer to $97trn. To close this $18trn gap, average annual global infrastructure investment would need to increase by approximately 23% per year"

C&D waste is the largest waste stream in the EU by volume. "Proper management of this waste can have major benefits in terms of sustainability, as well as offering a boost to the construction and recycling industry," the report states.

"However, its mismanagement can have severe negative consequences for the environment and any property developers, main contractors and subcontractors held liable."

Under Europe's waste and environmental laws, primary responsibility rests with the waste producer and the entities that exert economic control over the activities.

"C&D waste requires testing, proper classification and management before it leaves a development site," says Dawn Slevin, environmental strategist, international, AIG.

"Waste classification is a big exposure for clients," she continues. "Even if a subcontractor has responsibility for it and their contract states this, the waste producer is ultimately responsible: the site owner often relies on their construction design team."

An increase in C&D waste management claims could be down to several factors. One is the recovery of the European construction markets, with the sector emerging from recession after several years of restructuring.

And with more construction activity taking place and increased pressure on contractors, the potential for claims resulting from inadequate C&D waste management practices is heightened.


Bridge Getty ImagesTHE FUTURE

The risks do not remain with the past. Future risks will also need to be factored in. According to research from Allianz Global Corporate & Specialty (AGCS), cyber risks and the impact of new technologies will have an increasing influence on the corporate loss landscape in years to come.

"The report highlights the increasingly high values at risk for businesses and their insurers alike," says Philipp Cremer, global head of claims, AGCS. "In today's interconnected and globalised business environment, financial losses are increasing due to geographical concentration of values -- often in risk-exposed areas -- and from the knock-on effects of global supply chains and networks.

"Looking to the future, new technologies bring business benefits but also risks and claims. However, they also provide an opportunity to prevent and mitigate losses and improve the claims settlement process for our customers."

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