Sliding equity markets, underwriting losses push up rig insurance costs

Substantial underwriting losses in recent years, falling interest rates, declining equities markets, and the terrorist attacks of Sept. 11, 2001, are among the factors leading to more-costly insurance for drilling contractors and the energy industry.Rig insurance premiums have increased 2.5-3 fold in the past 12 months and, from 1999 lows, have approached levels of 8-10 years ago. Drilling contractors coming off fixed-price insurance deals for the first time in 2-3 years face added financial burden.Rig-insurance-policy deductibles have increased to $1 million or more levels from $200,000-$250,000. Insurance-company withdrawals from the energy sector have tightened available underwriting c...

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