NU Online News Service

The Deepwater Horizon oil rig explosion and spill is not a "watershed" event for the property and casualty industry despite an expected $4-to-$6 billion in commercially insured losses, Towers Watson said.

Towers Watson said the event may spur tightening of insurance prices and terms in the energy sector and noted that litigation may take decades to resolve.

In addition, directors and officers liability and workers' compensation losses may mean further payouts for the industry, and Towers Watson noted that other companies may be dragged into litigation as the process plays out.

But James Hole, Towers Watson managing director and a leader within the company's reinsurance brokerage business, said, "Usually, a major event causes the market to turn, with prices rising in the wake of the red ink. We do not expect that Deepwater is a sufficiently significant event to turn the overall commercial insurance market."

Comparing the Deepwater Horizon event to other major insurance events, using 2009 dollars, losses from the 9/11 terrorist attacks were about $23 billion and losses from Hurricane Katrina were about $71 billion, according to Swiss Re's sigma report.

In a typical year, total catastrophe losses in the United States total about $7 billion, Towers Watson said.

Regarding British Petroleum, Moody's Rating Service said in its Weekly Credit Outlook that steps taken by the company after reporting a $17.15 billion loss for the 2010 second quarter--including selling more assets and appointing a new chief executive officer--are "credit supportive."

But Moody's noted there is still "significant uncertainty" regarding the total cost of the oil spill that started on April 20 and was recently stopped.

Insurers Pledge Proceeds To Gulf Wildlife

To benefit wildlife impacted by the oil spill, a group of insurers has pledged to donate to the National Wildlife Federation's (NWF) Gulf Oil Spill fund $5 for every new customer that purchases a home insurance policy in August through HomeInsurance.com.

HomeInsurance.com said it has taken on the project with the help of Safeco, Foremost and Progressive insurance companies.

"We see it as our global responsibility to help in situations such as this where the wildlife in the Gulf Coast region is suffering from the effects of the recent oil spill," said Carlos Lagomarsino, chief executive officer of HomeInsurance.com. "Our goal is to raise at least $5,000 during the month of August to help support the NWF volunteers and efforts."

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Deepwater Horizon Not a P&C &#039;Watershed Event&#039;

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