International broker Lloyd & Partners reportedly told the Senators that at least one major energy liability insurer has already decided to cut back on the amount of coverage it will offer to individual companies by a third, and prices for insurance protection are likely to rise as a result.
Two weeks ago Commercial Risk Europe was told by the Head of Insurance for Repsol, the Spanish oil major, that he had already witnessed a hardening in the market only a few days after the incident occurred at the end of April.
John Lloyd, Chief Executive of Lloyd & Partners, told the politicians that a demand for higher limits from buyers combined with tighter capacity would inevitably impact prices.
The comments on capacity came as a group of Democrat Senators proposed an increase in the $75m cap on damage claims that BP must pay for the ongoing spill. Houston-based broker Alliant Insurance Services warned, however, that an increase in the liability limit would make it difficult for operators to secure adequate insurance protection, according to the report.
‘In our view, only major oil companies and National Oil Companies will be financially strong enough to continue current exploration and development efforts’ if the cap were raised substantially, wrote Benjamin Wilcox, an Executive Vice President at Alliant.
Republican senators led by Lisa Murkowski (R., Alaska) reportedly blocked the attempt to raise the liability cap this week.
It also emerged this week that no data records from the critical safety test supposedly performed hours before the rig exploded survived the blast.
According to Dow Jones, the U.S. Congress was told by rig owner Transocean that vital information from the last seven hours of the Deepwater Horizon could not be recovered. Some data was transmitted to shore for safekeeping right up until the explosion on April 20, 2010, but all written logs were destroyed in the blast.
Investigators can only speculate on the decisions made and warnings ignored in the run-up to the blast, stated the report. Earlier tests suggested, however, that explosive gas leaking from the mile-deep well were kept intact.
The log that is held did confirm that three pressure tests, conducted from the morning to the early afternoon of April 20, indicated unseen underground leakage into the well. But, according to Dow Jones, there is no mention of a fourth test that BP and Transocean say was conducted and that they claim indicated it was safe to proceed.