BP spill shows risks are outgrowing rewards for insurers
Dieter Berg, senior executive manager marine at Munich Re has said BP’s leak in the Gulf of Mexico is “a market-changing event”.
“Buyers and sellers of coverage will be reevaluating their appetites for offshore energy risk,” said Berg.
Insurers are reassessing how much they can afford to underwrite as the incident exposes higher liabilities than previously thought, said Gregory Thomas, head of offshore activities at Assuranceforeningen Skuld, an Oslo-based underwriter for deepwater contractors.
Prohibitive premiums
Prohibitive premiums and the impracticality of insuring one-time, catastrophic events could mean deepwater operators will need to be self-insured, said James Eck, vice president senior credit officer at Moody’s in New York.
“What insurer is going to want to put out $1bn worth of deepwater insurance and only get paid $5m to $10m after this? They may as well write a few more hurricane-insurance contracts,” Eck said.
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