Deepwater Horizon spill not going to be a “market changer”: Marsh

Although the Deepwater Horizon oil spill is an “important event in the history of deepwater drilling and exploration,” it’s not going to be an insurance “market changer,” experts at Marsh suggest.
In a report, Marsh compares the event to that of Hurricane Katrina and assesses the negative effects of each on the upstream energy insurance market.
Following Hurricane Katrina, the market experienced massive reductions in capacity and subsequent rate hikes, Marsh reports in its Energy Market Monitor.
But with the Deepwater Horizon losses, capacity has not constricted. Price increases are likely to be modest in other parts of the upstream energy market, unless more major losses occur, the report concludes.
“Following Hurricane Katrina, there was a massive change in the insurance landscape due to a lack of capacity and changes to the way in which wind insurance was sold,” said Jim Pierce, chair of Marsh’s global energy practice.
“Capacity currently isn’t an issue and insurers seem keen to maintain their commitment to the market.”