Julia Kollewe in the Guardian (UK): The insurance industry is forecasting a loss of up to $3.5bn (£2.4bn) from the growing oil spill in the Gulf of Mexico. This will be the biggest energy insurance loss in more than 20 years, and could drive up premiums. According to Lloyd's of London insurer Catlin, the 20 April explosion, which triggered an undersea well leak, will be the biggest loss in the energy market since the explosion of the Piper Alpha platform in 1988. A spiral of reinsurance losses from that disaster cost Lloyd's £8bn between 1988 and 1992.Swiss Re has estimated total insured losses from the oil rig at between $1.5bn and $3.5bn, and its own loss at $200m. JPMorgan Chase analyst Michael Huttner, who initially put the insurance industry's liability at $1.6bn, says Swiss Re's $3.5bn figure reflects additional costs if the oil comes ashore: "As soon as the oil hits the shore, it triggers additional policies linked to business disruption."
The losses estimated so far by individual insurers total about $700m. Experts say much of that will end up being paid by reinsurers, which cover the losses made by direct insurance companies – resulting in reinsurance price hikes that will be passed back to the insurers, who may then pass them on to customers.
Amlin, the largest group in the Lloyd's market, warned this week that it faces claims of up to $180m after a catastrophe-hit first quarter, including $15m from the oil spill. It expects the oil rig disaster to "trigger upward pressure on rates".
The remark was echoed by Chris White, the head of the energy division at Lloyd's underwriter Chaucer, who said the loss "demands a strong market response, with significant rate rises to compensate for the underwriting exposures confronted in these areas". Chaucer estimates its net loss at $25m from the oil leak….
A Coast Guard photo from April 21. Fire boat response crews battle the blazing remnants of the offshore oil rig Deepwater Horizon.
No comments:
Post a Comment