LLOYD’S of London syndicates are taking BP to court to stop it from claiming on cover held by rig operator Transocean. But the oil spill is a drop in the ocean compared to other disasters. This year is set to be a relatively quiet year for the insurance market.
These syndicates are only launching legal action against BP because they think they can win – and they’re probably right.
Yesterday, Lloyd’s of London estimated claims from the spill will total between $300m and $600m. To put that in context, claims from the Chilean earthquake will be in the order of $1.4bn. Taken together, it’s fair to assume the industry won’t be rewarded with another benign year, after a curiously disaster-free 2009.
Still, even the combined cost of Chile and the oil spill is relatively low. In 2008, Hurricane Katrina cost the industry $2.6bn while claims from 1989’s Hurrican Hugo – the most expensive disaster on record for the insurance industry – totalled $5.8bn.