Oil Insurance Limited (OIL)
Property mutual of oil and energy groups, founded in Bermuda in 1972, that lets them pool large losses among themselves instead of ceding them to the commercial market.
Large oil groups have a scale problem: their assets are worth more than the commercial market offers them in capacity, and they pay premiums for risks they know better than their insurers. In 1972, sixteen of them set up a mutual in Bermuda, Oil Insurance Limited, which its members own and which insures only them. It has been called Everen Limited since June 2022. Each member keeps a high retention, and the mutual takes losses above it, up to a per-occurrence limit raised in steps to $400 million in 2015. The model differs from a single group's captive: risk is shared among more than fifty members, and the loss profile is diversified. In exchange, a major loss is spread across all: members pay for it through their contributions. Members also buy complementary cover from the market (energy, liability), so OIL is only one piece of their program. The London market sees it both as a competitor and as a source of capacity for the largest losses. Not to be confused with a captive, owned by a single group.
Textbook case: a member oil group has a 10 million dollar retention. A refinery fire causes 300 million of damage. It bears 10 million, the mutual pays the rest up to its limit, and all members share the cost through a supplementary contribution the following year.
OIL, Oil Insurance Limited, OIL Bermuda, energy mutual OIL, energy industry mutual, Everen
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