OIL Insurance Ltd. Aggregation Limits Increased

Oil Insurance Limited said it has increased its aggregation limits for insurance coverage and added two additional sectors to the mutual's rating and premium plan.

The Bermuda-based mutual insurer, which provides insurance for energy interests primarily in the Gulf of Mexico, increased its aggregation limits to $750 million effective June 1, the start of the hurricane season.

After suffering $2.8 billion in losses in 2005 from a very active hurricane season, OIL reduced aggregate coverage from $1 billion to $500 million. In December the company increased limits to $750 million for all events that were not Atlantic named windstorms, but kept the $500 million limit on named storms for the period Jan. 1 to May 31 of this year.

Last week, OIL also added two sectors to its current rating and premium plan. The sectors are onshore and offshore Atlantic named windstorm storms (ANWS), which will also take effect June 1.

George F. Hutchings, senior vice president and chief operating officer, said by e-mail that the allocation does not affect its coverage of wind events offshore in the Gulf of Mexico, Caribbean and Atlantic, or onshore risks not bordered by the Gulf. He said these exposures cover many of the Caribbean Islands and Eastern United States.

OIL also announced it would incorporate a Top Up Pool for additional aggregation limits.

OIL said the Top Up Pool is designed to provide additional aggregation limits for ANWS events that exceed OIL's aggregation event limit.

The risk would either be mutualized for members electing to participate in the pool or by purchasing additional limits from the reinsurance market.

Mr. Hutchings said no limits have been set yet for the pool since "in all likelihood it will not be used this year."

Limits would be set by the amount of reinsurance purchased or by the number of members who wish to participate in the pool.

Reinsurance would be purchased by OIL, he said, and would be allocated to members who decide to participate.