Thursday, September 18, 2008
Marine and energy underwriters from around the world gathered in Vancouver this week for the annual conference of the International Union of Marine Insurance (IUMI). In the wake of Hurricanes Gustav and Ike there was much to talk about. A September 15 article in Lloydâ€™s List by James Brewer put preliminary estimates of losses to energy insurers from the two hurricanes at up to $800 million. This was based on an estimate from the IUMI energy and offshore committee chairman that the losses might cost between 10 percent and 30 percent of the energy marketâ€™s premium volume. Total global energy insurance income for 2008 is around $2.8 billion, the article notes.
As of September 15, the Minerals Management Service (MMS) reported that 28 of the 3,800 offshore oil and gas production platforms in the Gulf of Mexico have been destroyed by Ike, and several other platforms significantly damaged. In addition, three jack-up drilling rigs were reported destroyed and one with extensive damage. On a lighter note, preliminary reports from the MMS on Hurricane Gustav indicate only minor damage to oil and gas infrastructure in the Gulf. If accurate, the losses from Gustav and Ike though substantial, pale in comparison to the $5 billion cost to energy insurers (offshore losses only)Â from Hurricanes Katrina ($2 billion) and Rita ($3 billion) in 2005.Â