Deepwater Horizon event predicted to cost insurers between $4 billion and $6 billion

Towers Watson estimates the net insured losses arising from the Deepwater Horizon oil spill will be between $4 billion and $6 billion – not a major event for the property and casualty insurance industry.
The total of the coverage limits of the organizations involved in the spill is $3.3 billion. Towers Watson anticipates other companies associated with the spill may be drawn into the litigation, and that directors and officers liability and workers compensation losses may add to the tally.
By comparison, losses from the Sept. 11, 2001 terrorist attacks were about $23 billion (in 2009 dollars), and losses from Hurricane Katrina were roughly $71 billion, Towers Watson reported in a release, citing Swiss Re’s sigma report.
“The insurance industry has been operating in a soft market for the last six years, with commercial insurance prices generally falling for five years and flat for the last year,” said James Hole, Towers Watson managing director.
“Usually a major event causes the market to turn, with prices rising in the wake of the red ink. We do not expect that Deepwater is a sufficiently significant event to turn the overall commercial insurance market.”