Please see insurance groups' request re: equipment warranties.  One 
alternative is to send equipment contracts to David Marshall for  his review.

Kay
---------------------- Forwarded by Kay Mann/Corp/Enron on 03/14/2001 09:00 
AM ---------------------------


Paul E Parrish
03/14/2001 07:38 AM
To: John Schwartzenburg/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc: Keith Dodson/NA/Enron@ENRON, johng@nepco.com @ ENRON_DEVELOPMENT, Sheila 
Tweed@ECT@ENRON_DEVELOPMENT, Brett R Wiggs/SA/Enron@Enron, Jake 
Thomas@ECT@ENRON_DEVELOPMENT, Kay Mann/Corp/Enron@Enron, Nigel 
Carling/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Stephen P 
Stein/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Steve 
Reistetter/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, John 
Novak/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Sami Arap/SA/Enron@Enron, Mark 
Evans@ECT@ENRON_DEVELOPMENT, John G 
Rigby/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Scott 
Dieball/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Paul E 
Parrish/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, 
davidlu@nepco.com@ENRON_DEVELOPMENT, Jon Chapman@ENRON_DEVELOPMENT, Richard 
Leibert/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, James L 
Bouillion@ECT@ENRON_DEVELOPMENT, Rob 
Walls/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT 

Subject: WARRANTIES & INSURANCE
LATEST MARKET DEVELOPMENT  

John:
I worked on someone else's project recently and have requested the cost to 
include suppliers on the coverage so I will be interested to see if it is 
available and, if it is, the cost.
Paul



John Schwartzenburg@ENRON_DEVELOPMENT
03/14/2001 07:03 AM
To: Keith Dodson/NA/Enron@ENRON, johng@nepco.com @ ENRON_DEVELOPMENT, Sheila 
Tweed@ECT, Brett R Wiggs/SA/Enron@Enron, Jake Thomas@ECT, Kay Mann@ENRON, 
Nigel Carling/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Stephen P 
Stein/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Steve 
Reistetter/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, John 
Novak/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Sami Arap/SA/Enron@Enron, Mark 
Evans@ECT, John G Rigby/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Scott 
Dieball/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Paul E 
Parrish/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, davidlu@nepco.com, Mark 
Evans@ECT, Jon Chapman@ENRON_DEVELOPMENT
cc: Richard Leibert/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, James L 
Bouillion@ECT, Rob Walls/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT 

Subject:  WARRANTIES & INSURANCE
LATEST MARKET DEVELOPMENT  

JWVS



Paul, thanks for putting the word out on this, since excluding collateral 
damage from warranty problems from BI will surely impact the risk profile of 
any project if the vendors will not step up to the collateral damage in their 
vendor contracts. 

Jim and Paul, do you know if the underwriters will offer coverage to the 
vendors or turnkey contractors for this issue under their respective 
contracts? GE (who are likely to want to continue to self-insure) can be 
expected to put up a real struggle before choking liability for collateral 
damage down, as  they will likely see it as a material risk issue. I think it 
ought to be added to the form contract discussions with GE as a test case.

I think this is an important enough change in the market that we need to 
develop a common approach or at  least a common understanding accross Enron 
and NEPCO on the issues. 

I will be back in the office next week and chase it up with you guys then.




	Nigel Carling
	03/13/2001 09:19 AM
		 
		 To: Stephen P Stein/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Dan 
Shultz/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, John 
Schwartzenburg/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Joe 
Reynolds/ENRON_DEVELOPMENT, Keith Dodson/NA/Enron@ENRON, John G 
Rigby/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Steve 
Reistetter/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
		 cc: 
		 Subject: WARRANTIES & INSURANCE
LATEST MARKET DEVELOPMENT

FYI
----- Forwarded by Nigel Carling/ENRON_DEVELOPMENT on 03/13/2001 09:16 AM 
-----

	Paul E Parrish@ENRON
	03/13/2001 08:02 AM
		 
		 To: Nigel Carling/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Spencer 
Burton/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, John 
Cullen/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Michael 
McGarry/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Bob 
Meckna/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, James 
Naeger/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Donald 
Reid/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Michael Guerriero/SA/Enron@Enron, 
Kevin Ruffcorn/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Rafi 
Khan/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Richard Quek/SIN/ECT@ECT, Manuel 
Gallego/ENRON_DEVELOPMENT@ENRON_DEVELOPMENt, John R Ayres/NA/Enron@Enron, 
Brett R Wiggs/SA/Enron@Enron, David Lund, Dag Adolfsson/HOU/EES@EES, Curly 
Baca/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Brian D 
Barto/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Kenneth Bean/HOU/EES@EES, Karl 
Breckon/NA/Enron@Enron, John Cates/HOU/EES@EES, Ed Cattigan/EU/Enron@ENRON, 
Ned E Crady/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Greg Curran/CA/Enron@Enron, 
Scott Dieball/ENRON_DEVELOPMENT@ENRON_DEVELOPMENt, Roberto 
Figueroa/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, David 
Glessner/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, David Howe/Corp/Enron, James A 
Hughes/ENRON_DEVELOPMENT, Christopher B Hunt/ENRON_DEVELOPMENT, Michael 
Oehrle/ENRON_DEVELOPMENT, Larry Reynolds/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, 
Rob Walls/NA/Enron, David K Bargainer/ENRON_DEVELOPMENT, Cheryl 
Costa/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Ed 
Dannhaus/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Phillip 
Foster/ENRON_DEVELOPMENT@ENRON_DEVELOPMENt, Gavin 
Gaul/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Bruce 
Golden/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Steve 
Heck/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Edward J Hlopak 
Sr/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Edward Hlopak Jr/Enron 
Communications@Enron Communications, Ed 
Husami/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, John G 
Rigby/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Robert Lundin/NPNG/Enron@ENRON, 
Michael Ranz/ENRON@enronXgate, Scott 
Laidlaw/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Joe 
Lakes/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Martin Penkwitz/HOU/EES@EES, Jim 
Sutherland, Brian Stanley/EU/Enron@ENRON, Roger 
Tietz/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
		 cc: Richard Vincent/ENRON_DEVELOPMENT, David Marshall/HOU/ECT@ECT, Terry 
Yamada/Corp/Enron@ENRON, James L Bouillion/HOU/ECT@ECT, Paul 
Clayton/HOU/ECT@ECT
		 Subject: WARRANTIES & INSURANCE
LATEST MARKET DEVELOPMENT


To Distribution:

Recently, the insurance market has become much more restrictive with its 
terms and conditions and is looking for substantial rate increases, 
especially on property, machinery breakdown and business interruption 
coverages.  For example, because of market conditions and adverse loss 
experience, Enron,s deductible for certain asset classes will be increased 
from $500,000 to $5,000,000 combined per incident of property damage and 
business interruption along with a  (quantify percentage) premium increase.  
In the context of construction risks and the associated operation of new 
facilities, one of the major areas of underwriters, concerns are the nature 
and scope warranties offered by the OEM.

Underwriters are requiring their insureds [Enron] to secure warranties from 
major equipment suppliers, especially where technology risks are involved. 
With the increase in insurance pricing and deductibles across the board,  
underwriters are particularly sensitive to  certain types of technology, and 
capacity will be severely limited or unavailable at any price if no 
warranties are provided.

To ensure that superior, cost-effective insurance programs can be obtained 
for our projects, it is imperative that Enron projects secure manufacturers, 
warranties in the contracts negotiated with equipment suppliers and vendors.. 
Underwriters will require genuine guarantees, not just &token gestures8. They 
will require rights of subrogation against the OEM, which means that we 
cannot agree to a waiver of subrogation for the benefit of  the 
manufacturers. It is the underwriter,s position that the manufacturer is to 
take the risk for their design failure, faulty metallurgy, workmanship, and 
unsuccessful &new8 techniques and the underwriter will provide insurance for 
pure fortuitous loss or damage.

If you find that someone is not listed in the distribution list, please pass 
this email to them. If you have any questions please call or email one of us 
listed below:

Richard Vincent
David Marshall
Terry Yamada
Paul Parrish
Jim Bouillion
Paul Clayton