Industry News & Tips

The Effects of the Deepwater Horizon Disaster Just Starting!

May 31, 2010

Gene Horton

   Early on Thursday while marketing an account I was told by one of my markets that the marine and the re-insurance markets where in a “state of alarm” over the Deepwater Horizon disaster. Already underwriters are staking their positions in order to limit their exposure. The following article from Insurance Journal give a good glimpse of what is to follow.

 

   “ Lloyds, Other Insurers Sue to Block BP Claim Against Transocean

               Lloyd's of London has asked a U.S. court to block a claim filed by oil major BP seeking damages against driller Transocean, which drilled the well which is currently gushing crude into the Gulf of Mexico.

  Lloyds underwriting syndicates and other insurers who provided $700 million of cover to Transocean lodged a case with a federal court in Houston, arguing that the policies provided to Transocean preclude claims related to environmental damage caused by leaks from the well.

  According to court documents, the insurers argue that Transocean's contract with BP only makes it liable for environmental damage caused by any spills from its rig, which exploded and sank, causing the pipe running from the rig to the well to snap. The well is leaking oil. BP said it had lodged a claim against the insurers but declined to comment further. No one was available for comment at Transocean.

 

  Even if BP were awarded the full $700 million of cover the insurers provided to Swiss-based Transocean, it would be only a small fraction of the total bill for the cleanup operation and compensating people who suffered losses due to the spill. Analysts at UBS put the likely cost of this at $12 billion, in a report issued on Tuesday.''

  (Reporting by Tom Bergin; Editing by Cynthia Osterman)

  All of us in the maritime industry know where and how this is going to affect us. For the insured's, rates and premiums will be higher. For brokers, placements will be harder and more stressful, especially on renewals. Some older tonnage may be placed out of the market all together. The average person watching this on television may not be aware of the effects on them, but they will soon start feeling the results as their premiums go up as re-insurers try to make up their losses because of Deepwater Horizon. To add to everyone's concern, we are not even in hurricane season yet!

 

 

 

 

 

  Will add more to this if we get any more industry information,

  Gene at HortonMarine.com