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Catastrophe
Sunday, August 1, 2010
Getting capped

The cost of the massive British Petroleum (BP) oil spill from its fractured undersea well in the Gulf of Mexico now stands at about US$2.65 billion (as at mid-July) and rising. It’s anticipated that the insurers, mainly Lloyds, will have to pay out up to an estimated US$600m.

Notwithstanding the scale of the disaster, global commercial insurance rates are unlikely to be affected much; but will, instead, lead to stricter terms and conditions and higher premiums for specific operations linked to the oil business, such as cover for offshore oilrigs and drilling.
Comments Danny Buitendag, General Manager, Broking Services, Corporate, Glenrand MIB, “It would need a far greater catastrophe running into tens of billions of dollars to impact on global insurance terms right now.”
Meanwhile, BP confirms its MC252 well has been successfully shut-in for integrity testing since 15th July and that “there is currently no oil flowing into the Gulf (as of 26th July 2010).”
     Active monitoring continues during the integrity test. After being temporarily suspended due to Tropical Storm Bonnie, the DDIII rig is now back on-site, has re-run its riser, and was preparing to re-connect late July. Pressure continues to increase slowly and is approximately 6914 psi at the time of going to press.
Says a spokesman, “At BP, we have taken full responsibility for the cleanup in the Gulf. We've also pledged to keep people informed. We have committed to do everything we can to make this right and to work as long as it takes, on the ocean, on the shore and in the community. The scale of the response programme is unprecedented. From around 2 000 people mobilised in the week following the Gulf of Mexico incident, the response team has grown to over 40 000. People and resources are being co-ordinated from command centres and staging areas in Louisiana, Mississippi, Alabama and Florida.”
So far BP has received 127 400 claims and written out some 80 000 cheques for compensation. The event initiated on 20th April 2010 at the Macondo Prospect from an explosion on the Deepwater Horizon oil rig in which 11 people were killed and millions of barrels of crude oil started disgorging into the Gulf of Mexico from a ruptured well point on the seabed floor at a depth of about 1 500 metres. The oilrig sank two days later. Its other claim to fame is that it currently holds the world record for deep sea drilling of just on 10 683 metres at the Tiber field in 2009, south-east of Houston.
 

Copyright © Insurance Times and Investments® Vol:23.8 1st August, 2010
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