The Deepwater Horizon disaster has sparked higher prices for insurance covering offshore drilling in the Gulf of Mexico.
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Deepwater Horizon oil rig
Insurers worry about their risks as they watch daily reports of the disaster, in which a rig burned, sank and set off the worst oil spill in U.S. history, according to the Wall Street Journal.
Richard Kerr, chief executive of the Dallas-based electronic insurance exchange MarketScout, told the newspaper the cost of insuring a rig, previously from $3 million to $9 million a year, had risen between 15% and 25% for rigs in shallow waters. Insuring deeper water rigs could cost as much as 50% more, Kerr said.
“Energy premiums are going to increase, especially for offshore accounts,” Kerr said in a recent statement. “The disaster suffered by British Petroleum in the Gulf of Mexico is huge and will have an immediate impact on all offshore energy placements. British Petroleum is largely self-insured; however, energy underwriters across the globe will participate in this loss via either excess placements, insurance on the non-operators (investors), drilling contractor or blowout prevention manufacturer.”
Until the Deepwater incident last month, insurers worried most about the effects of a hurricane or severe storm on the rig and equipment, according to the newspaper.
Oil rig insurance prices uncapped after Deepwater Horizon spill via IFAwebnews .
