Offshore energy insurance

Offshore energy insurance covers oil and gas platforms at sea, submarine pipeline systems, floating production and storage vessels (FPSOs) and drilling infrastructure against a range of physical and liability risks. Main covers include physical damage to the platform and equipment, loss of production following a physical loss, civil liability toward third parties and the environment, and well-control costs in the event of a blowout, meaning an uncontrolled eruption of hydrocarbons. A blowout is the most feared loss: the Deepwater Horizon disaster in 2010, operated by BP in the Gulf of Mexico, caused insured and uninsured losses estimated at over 65 billion dollars, including well-control costs, decontamination, compensation for fishermen and local residents, and massive civil and criminal fines. The market is highly specialized and concentrated in London. OIL (Oil Insurance Limited) is the mutual pool of the major oil companies. Lloyd's and London Energy market companies cover risks beyond the pool's capacity. OEE (Offshore Energy and Engineering) refers to the specific product line offered by certain Lloyd's syndicates.

The explosion of the Deepwater Horizon platform in April 2010 in the Gulf of Mexico triggered the costliest loss in offshore energy insurance history. Well-control policies were fully exhausted, and BP ultimately bore more than 65 billion dollars in total charges, the bulk of the overruns not being covered by the policies in place.

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