Why BP is its own insurer

BP has already spent more than three billion dollars to repair the damage from the disaster of the Gulf of Mexico. While adding a little more gets heavier every day, analysts argue the most pessimistic estimates of total bill of 100 billion dollars. The amount is even more impressive that BP is not guaranteed.

The tanker has decided there fifteen years to support himself in a reinsurance subsidiary (a "captive") the management of all of its risks. Given its size, BP did not see the benefit of paying premiums to pool their risks in a relatively small market.

Its subsidiary, Jupiter Insurance, may surrender to its parent up to $ 700 million per event. A rather small amount compared to the competition.For example, Total has a coverage of 1.3 billion dollars for its offshore drilling activity, which 250 million are made with the mutual oil, OIL, born in the early 1970s.

"After a well blowout offshore offshore California and the refusal of the insurance market of the time to cover this risk, tankers have decided to create a mutual dedicated to coverage of risks pollution, explains Gérard Naisse, director risk assessment and insurance group To tal. BP has been a member of OIL before withdrawing. "

Rising premiums

The capacity of offshore insurance is divided between the mutual OIL and Lloyds of London, the first global insurance market absolutely free credit score.In 1988, the explosion of a well off Scotland cost the members of Lloyd's 8 billion pounds. For BP, the amount of the final bill will depend on ongoing legal proceedings and from which he will return.

BP is indeed not the only company involved in the operation of wells. And the big oil struggles to court to best allocate the bill with its partners, which are, themselves, insured market.

Before knowing the exact extent of damage, the insurers have preferred to take the lead, and it shows in their prices. "For renewals of July, there are requests for tariff increases of around 25% for the covers of drilling in deep offshore, notes and Gerard Naisse. It remains to see if oil will agree to pay these prices."Meanwhile, the mutual OIL spark a renewed interest from oil that had opted for self-insurance as BP.

The disaster should not have repercussions beyond this niche of the insurance of offshore drilling. "It's a limited market, rather compartmentalized analysis John Money, head of the energy division of Aon. The accident at BP should not have any impact on other branches of industrial risk. "■

"The accident at BP should have no impact on other branches of industrial hazard"

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