Sliding equity markets, underwriting losses push up rig insurance costs

11/25/2002
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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