Munich Re has developed a new insurance solution covering oil companies against liability risks arising from oil catastrophes during offshore drilling operations.
With the solution, each individual drilling operation will be covered and there is a possibility to increase liability limits to $10bn – 20bn per drilling operation.
In addition, based on the US oil pollution act, cover would relate to clean-up and removal costs, impairment of natural resources and property damage, and also of earnings in sectors such as fishing or tourism.
Munich Re board member Torsten Jeworrek said that if coverages are available, companies will buy them because inability to pay high compensation claims can lead to insolvency, and mere speculation about such an eventuality can hit their share price.