Science of Deepwater drilling and lawsuits will raise prices
Rising energy insurance premiums following last month's BP/Transocean Deepwater Horizon disaster in the Gulf of Mexico, may become permanently higher, Dow Jones reports.
It warns the investigation of the disaster could reveal previously unknown dangers and the legal wrangling could blame more broadly than insurers expect.
"The science and engineering involved were believed to be quite advanced, and you have to rethink those assumptions," said George Stratts, the head of marine and energy coverage at Chartis, the property-casualty arm of AIG.
"Are these types of drilling methods and techniques as sophisticated as we thought, and are the risk mechanisms in place as sophisticated as they need to be?"
Lawsuits are seeking to pin blame on:
- BP, the primary leaseholder of the well
- Anadarko Petroleum and Matsui Oil Exploration, the minority partners
- Transocean, the rig operator
- Halliburton, the company responsible for cementing the well
- Cameron International, the maker of the so-called blowout preventer, which appears to have failed to operate properly.
"Even if this particular case doesn't become a large liability event for the insurance market, it surely shows the potential of such claims arising," said Axil Brohm, the head of Swiss Re's energy and power unit. The potential alone may push offshore insurance rates higher.
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