CATASTROPHE COVER FOR OFFSHORE OIL DRILLING

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8 Νοε 2013 (πριν από 4 χρόνια και 1 μήνα)

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CATASTROPHE COVER FOR
OFFSHORE OIL DRILLING
Monte Carlo, 12 September 2010
Torsten Jeworrek
Risks are becoming more complexMunich Re concept for offshore oil drilling
BP Re
p
ort Pins Most ofBlameon Others
p
Wall Street Journal, September 8, 2010
BP's share price plunges
as clean-up costs mount
TheIndependent30April2010
The

Independent
,
30

April

2010
12.09.2010
2
Munich Re Media Conference, Monte Carlo
Munich Re is extending the boundaries of insurability
Insuring oil catastrophes –The dilemma today Munich Re concept for offshore oil drilling
Ob
j
ective: Lon
g
-term switch to renewable ener
g
ies
jg
g
In the meantime, however, oil drilling operations are needed to cover rising energy
consumption
Complex and costly drilling operations are becoming increasingly attractive as the
oil price rises
Af300dillitiithGlffMil

A
verage o
f

300
new
d
r
illi
ng opera
ti
ons every year
i
n
th
e
G
u
lf
o
f

M
ex
i
co a
l
one
The cause of oil catastrophes and liability situation frequently unclear:

﹯ﹴイ葉冀便ュﹳ說省ﱬﵥュ



ﹴ



葉冀

便



ﵰョ

省

ﱬ

ﵥ

ュ
Extremely high compensation claims possible

拾﹣﹥便ﱬッ塞ウ







﹣﹥







ﱬ





エ



ﱬ



ﱯ
Thesolution

Anewtypeofinsuranceconcept
12.09.2010
3
Munich Re Media Conference, Monte Carlo
The

solution


A

new

type

of

insurance

concept

Basic premise: Greater safety in offshore drillingMunich Re concept for offshore oil drilling
Improvedriskmanagement
Otherfactors
Improved

risk

management
More stringent safety standards
More stringent safety standards
Other

factors

Increase in existing liability limits under
theUSOilPollutionAct
Increase in existing liability limits under
theUSOilPollutionAct
Risk management reviewed by
independent experts

ョ葉ﹴﱳ

Risk management reviewed by
independent experts

ョ葉ﹴﱳ





ゥ

ﱬ說


Cover through insurance

ﭥﱤﱥ




ゥ

ﱬ說


Cover through insurance

ﭥﱤﱥ

ョ葉

ﹴﱳ





ェﱩﵥﰠ
率ﱩ﹧葉﹧沈ﵳ

ョ葉

ﹴﱳ





ェﱩﵥﰠ
率ﱩ﹧葉﹧沈ﵳ

ﭥ



ﱤ

ﱥ



塞ﱩ﹧ﵰ便ﹴイ
ﱩ

ﭥ



ﱤ

ﱥ



塞ﱩ﹧ﵰ便ﹴイ
ﱩ
Improved risk management as integral part of the licensing
12.09.2010
4
Munich Re Media Conference, Monte Carlo
process
The solution –Special policies for oil drilling operationsMunich Re concept for offshore oil drilling
Existing covers
(
ifi
New cover
(
company-spec
ifi
c
liability policies)
remain in place

Possiblyinorder
Project-specific liability policy:
Cover for each drilling operation
Possibly

in

order

to cover the
retention
Limit: US$ 10bn to 20bnLimit: US$ 10bn to 20bn
Limit: US$ 10bn to 20bn
Insurance of all new and existing
drilling operations
Exploration wells
Development wells (between
discovery and production)
Production wells
Workovers (measures to
improve production)
Retention: approx.
US$ 1bn
Retention: approx.
US$ 1bn
Retention: approx.
US$ 1bn
12.09.2010
5
Munich Re Media Conference, Monte Carlo
Better coverage through significant increase in liability limits
Details of the innovative insurance concept Munich Re concept for offshore oil drilling
Insurancecoverforeachindividualdrillingoperation
Insurancecoverforeachindividualdrillingoperation
Insurance

cover

for

each

individual

drilling

operation

Insurance

cover

for

each

individual

drilling

operation

Scope of cover
Based on local liability law
For the USA, scope of cover based on the Oil Pollution Act:

Removalwork
ƒBased on local liability law
For the USA, scope of cover based on the Oil Pollution Act:

Removalwork
Removal

work

Clean-up of polluted areas
Damage to natural resources
Thid
ttd
Removal

work

Clean-up of polluted areas
Damage to natural resources
Thid
ttd

Thi
r
d
-par
t
y proper
t
y
d
amage
Loss of profits and earning capacity in other industries (e.g. fishing, tourism)

Thi
r
d
-par
t
y proper
t
y
d
amage
Loss of profits and earning capacity in other industries (e.g. fishing, tourism)
Limit of indemnity
In excess of previous insurance solutions

葉﹤ヲエ
In excess of previous insurance solutions

葉﹤ヲエ

6
Munich Re Media Conference, Monte Carlo

葉﹤



エ



葉﹤



エ


Clear liability situationMunich Re concept for offshore oil drilling
Joint venture:
Oil company A
Cover for each drilling
operation
Limit: US$ 10bn to 20bn
Oil company B
Oil company C
Hold harmless
agreement
Retention:
approx. US$ 1bn
Drilling company B
Drilling company B
Drilling company A
Drilling company A
SubcontractorB
SubcontractorB
SubcontractorA
SubcontractorA
Supplier A
Supplier A
Supplier B
Supplier B
Supplier C
Supplier C
Subcontractor

B
Subcontractor

B
Subcontractor

A
Subcontractor

A
12.09.2010
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Munich Re Media Conference, Monte Carlo
Structure of the insurance solution
Munich Re concept for offshore oil drilling
Traditional
Insurance consortium
Fixed group of (re)insurers
Ehtiitfid
Fixed group of (re)insurers
Ehtiitfid
Pool
Consortium comprising all oil
companiesthatcarryoutdrilling
Consortium comprising all oil
companiesthatcarryoutdrilling
Traditional
(re)insurance
Each drilling operation is
placedonaco
-
insurance
Each drilling operation is
placedonaco
-
insurance

E
ac
h
par
ti
c
i
pan
t
agrees
fi
xe
d

capacities
Uniform prices and conditions

E
ac
h
par
ti
c
i
pan
t
agrees
fi
xe
d

capacities
Uniform prices and conditions
companies

that

carry

out

drilling

operations
Oil companies pay into the pool
according to market share
companies

that

carry

out

drilling

operations
Oil companies pay into the pool
according to market share
placed

on

a

co
insurance

basis at current market
conditions
placed

on

a

co
insurance

basis at current market
conditions
Losses are paid proportionally
from the pool
Pool is reinsured on the free
Losses are paid proportionally
from the pool
Pool is reinsured on the free
market
market
Guaranteed capacity
available
Guaranteed capacity
available
Free competition
Free competition
Relatively secure capacity
Relatively secure capacity
available
Simple administration
available
Simple administration

A
n
t
i
t
r
ust
i
ssues
n
eed


A
n
t
i
t
r
ust
i
ssues
n
eed

Flexible pricing, conditions
and limits
Flexible pricing, conditions
and limits

Capacitynotsecured
ƒ
Capacitynotsecured
ƒ
Acceptanceamongoil
ƒ
Acceptanceamongoil
12.09.2010
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Munich Re Media Conference, Monte Carlo
ttustssueseed
to be clarified
ttustssueseed
to be clarified
Capacity

not

secured

Capacity

not

secured

Acceptance

among

oil

companies may prove difficult
Acceptance

among

oil

companies may prove difficult
Advantages of the new insurance conceptMunich Re conceptfor offshore oil drilling
For injured parties: Clarity as regards who pays losses
For injured parties: Clarity as regards who pays losses
For society: Clarity regarding who pays costs for damage to natural resources
For society: Clarity regarding who pays costs for damage to natural resources
For drilling companies, subcontractors and suppliers: Clearly defined liability situation (hold harmless
agreements are protected)
For drilling companies, subcontractors and suppliers: Clearly defined liability situation (hold harmless
agreements are protected)
For oil companies and their shareholders: Transfer of risks to the insurance industry possible,
therefore reduced risk of losing capital and plummeting share prices
For oil companies and their shareholders: Transfer of risks to the insurance industry possible,
therefore reduced risk of losing capital and plummeting share prices
F
orsmallandmedium
sizedoilcompanies:Reducedriskofinsolvency
F
orsmallandmedium
sizedoilcompanies:Reducedriskofinsolvency
F
or

small

and

medium
-
sized

oil

companies:

Reduced

risk

of

insolvency
F
or

small

and

medium
-
sized

oil

companies:

Reduced

risk

of

insolvency
Significant reduction in unknown accumulations for (re)insurers therefore much greater capacity
possible
Significant reduction in unknown accumulations for (re)insurers therefore much greater capacity
possible
MunichReisofferingsubstantialcapacityforthisconcept
12.09.2010
9
Munich Re Media Conference, Monte Carlo
Munich

Re

is

offering

substantial

capacity

for

this

concept
Munich Re develops solutionsMunich Re concept for offshore oil drilling
Additional safety net for injured parties
Initiall
y
develo
p
ed for the US
A
Additional safety net for injured parties
Initiall
y
develo
p
ed for the US
A
yp
Concept can be transferred to other countries
yp
Concept can be transferred to other countries
Next steps:
Consultations with representatives of oil industry as well as with insurers and
reinsurers
Munich Re expects the concept to be taken up in the US administration’s
idii
Insuranceindustryisthusfulfillingitseconomicrole
ongo
i
ng
di
scuss
i
ons
12.09.2010
10
Munich Re Media Conference, Monte Carlo
Insurance

industry

is

thus

fulfilling

its

economic

role
Disclaimer
This
p
resentation contains forward-lookin
g
statements that are based on current assum
p
tions
p
gp
and forecasts of the management of Munich Reinsurance Company. Known and unknown
risks, uncertainties and other factors could lead to material differences between the forward-
lookin
g
statements
g
iven here and the actual develo
p
ment
,
in
p
articular the results
,
financial
ggp,p,
situation and performance of our Company. The Company assumes no liability to update these
forward-looking statements or to conform them to future events or developments.
12.09.2010
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Munich Re Media Conference, Monte Carlo