Insurance property pricing for deepwater drilling platforms up to 50% higher in wake of Deepwater Horizon: Moody’s

Property pricing for drilling platforms in the wake of the Deepwater Horizon loss has already increased between 15% and 25% for rigs operating in shallow waters and up to 50% higher for deepwater rigs, Moody’s Investors Service in a new report.
Total insured losses from the explosion of the Deepwater Horizon drilling rig are currently estimated to be between $1.4 billion and $3.5 billion, the report adds.
The full report, Deepwater Horizon Losses Sting Insurers and Reinsurers as Hurricane Season Looms, is available at www.moodys.com.
Moody’s notes claims are likely to come from a number of lines, including marine hull, marine liability, general liability, environmental/pollution liability, control of well, business interruption, D&O liability and workers’ compensation.
“Potential business interruption claims represent the largest unknown for insurers,” said James Eck, vice president and senior credit officer at Moody’s, in a statement. “Pollution damage along the coastline could push industry insured losses toward the upper end of the current estimated range.”
With the 2010 hurricane season now underway, any additional offshore energy losses in the Gulf of Mexico this year could further bolster pricing for these risks, Moody’s said.
“We believe this event will have a meaningful impact on the market for offshore energy-related insurance coverages,” said Eck. “Pricing for offshore energy liability insurance will likely also trend higher as insurers and reinsurers take stock of their losses and re-evaluate the complex risks associated with drilling in deep waters.”