Application of Failure Mode Effects Analysis (FMEA) to Calculate the Insurance Rate to Remaining Risk

Background: The traditional FMEA risk assessment uses tables meant for European and American companies. Because there are various safety, health and environmental conditions at each country, it is necessary to prepare tables pertinent to real conditions of firms. Aim: To develop adapted tables, evaluate risks, and finally calculate the insurance rate of remaining risks based on such tables. Methods: Data of machinery faults and human accidents were collected from HSE department of the cement factory and recorded in EXCEL 2010 software. Thereafter, machinery mechanical and electrical failures were filtered and calculated as the number of fails per day and duration of failures per hour. Then, both direct and indirect costs of all occupational accidents were calculated by the software. Finally, adapted FMEA insurance tables were designed based on the cost data obtained from the factory's HARP unit and the costs of human accidents. Results: In our evaluation, 183 risks were noticed in the crusher unit and recorded in FMEA worksheets. Following correction of data, only 39 risks remained in the allowable zone. Using FMEA insurance table, an amount of $106,400 as insurance cost was calculated for remaining risks, which was very considerable compared to that ($175,000) calculated for the crushing equipment by the insurer. Conclusion: According to the results, the use of adapted FMEA tables as a new method can be very useful for cost calculations of risks.