NU Online News Service

With millions of gallons of oil per day spilling into the Gulf of Mexico since April 22, threatening wetlands and fisheries and the death of 11 crew members, the Deepwater Horizon disaster appears to be far from over and Moody's today put the current total insured loss estimate between $1.4 billion and $3.5 billion.

Moody's noted that insured losses would be significantly higher if BP plc, the operator and majority owner of the project, had purchased liability insurance in the commercial market instead of self-insuring its risks through its captive insurer, Jupiter Insurance Ltd., for property and liability coverages.

Moody's said the captive substantially reduces the exposure of the commercial reinsurance and insurance industry to the event. And given the magnitude of the potential costs associated with the clean-up and other compensatory payments, Moody's said it is possible that other parties found liable will exhaust the limits of their insurance policies, shifting any additional costs back to the project participants.