EQECAT announced today it has launched a catastrophe model for oil and gas platforms, pipelines and other offshore energy industry infrastructure in the Gulf of Mexico.
Rick Clinton, president of EQECAT–an Oakland, Calif.-based subsidiary of ABSG Consulting Inc.–said the Offshore Energy Model "will help insurers and energy producers quantify their offshore risks, which can lead to better pricing and use of capital."
In developing the Offshore Energy Model, EQECAT said it combined its extreme-risk modeling expertise with the offshore experience and the risk management expertise of ABS Consulting, which does extensive work with energy companies and the U.S. government.
According to the company, quantifying risks for the offshore energy market is significantly different and more complicated than modeling for onshore property risks.
EQECAT said most loss damage onshore is attributed to wind, while losses to the offshore energy market are primarily due to severe waves and currents generated by a storm, as well as undersea landslides.
In addition, it mentioned that while some of the risks to offshore energy include property exposures to platforms, wellheads and pipelines, an important component of the risk in the offshore energy market is centered on continuity of production issues.
The company noted that the offshore energy insurance market also has some special policy conditions that have to be taken into consideration when modeling this risk.
"We believe our model takes these issues into consideration and establishes a new industry standard for offshore risk quantification," Mr. Clinton said.
Besides those risks already mentioned, EQECAT said the model also takes into account the removal of debris caused by a specific event, business interruption and contingent business interruption.
EQECAT bases its models on "generally accepted science, engineering expertise, claims data and advanced mathematics. As a result, the models are consistent with the historical experience," Mr. Clinton said.
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