Where did January go? It’s probably an annual cry, however it is certainly true that 2011 is fast fading into memory, even if the consequences of some of its events are still to be fully appreciated. In our last edition we observed that the then recent news in the upstream energy sector seemed to have been almost entirely about casualties, and January hasn’t been a happy month for many energy and marine insurers. The world’s media understandably gave considerable coverage to the disaster involving the cruise liner Costa Concordia, which tragically resulted in more than thirty deaths. The consequences of this debacle will play out over the rest of this year and beyond. One certainty is that one of the largest ever marine insurance claims will result from a casualty that should have never occurred.
In the upstream sector it was another jack-up loss that drew attention. The mid-January blow-out of an exploratory gas well offshore Nigeria looks likely to have caused the loss of the MODU KS Endeavor and an attendant liftboat, as well as the deaths of two Contractor employees. With the well fire continuing and at least one relief well to be drilled, a gross loss of several hundred million US Dollars is anticipated.
Losses flowing from the October/November flooding in Thailand remain difficult to accurately quantify, as does the impact on the downstream energy book. Some market sources suggest a total market gross insured loss of between USD15bn and USD20bn.
Apart from casualty news there was little to catch the eye in the first few weeks of 2012, at least for those focussed on the energy insurance and risk management sector. However, merger and acquisition activity continued, and a number of operations with Lloyd’s underwriting interests remain ‘in play’ with their immediate futures likely to be determined in 2012. The revision of the WELCAR 2001 construction wording remains a work in (slow) progress and there are some hopes that a draft pollution liability wording will be seen before too long.
However, whatever the rest of 2012 throws at our clients and ourselves we relish the prospect of another stimulating year and look forward to talking to you about your particular insurance and risk management needs and aspirations.
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