Deepwater Horizon Poses Both Threats and Opportunities to Insurers, According to Advisen Webinar Panelists

Business Wire, July 27, 2010

Losses are likely to spread throughout the commercial insurance
industry, but heightened awareness creates new product and sales
opportunities

NEW YORK — The Deepwater Horizon oil spill may now be capped, but much of its
impact on commercial insurers has yet to be felt, according to legal,
environmental and insurance experts participating in an Advisen webinar
on Friday, July 23. In addition to companies involved in the drilling
project itself, all of which already have been sued, salvage firms,
cleanup contractors and others involved in the cleanup process are
exposed to lawsuits that likely will result in insurance claims.

BP is self-insured, but the other major players together have more than
$2 billion in liability limits placed in the insurance market, said
Dave Bradford, an Advisen Executive Vice President and one of the
webinar panelists. The insurance exposure, however, is much broader
than that small group of companies. Already some of the companies
involved in the salvage effort have been sued, and almost any company
taking part in the cleanup process is a potential target. Not only are
general liability and environmental liability policies exposed, but also
directors and officers liability policies.

Attorney Stuart Smith of Smith Stag LLC, another panelist, predicted
suits will be brought under various environmental laws such as CERCLA,
Act to Prevent Pollution from Ships, Clean Water Act, Endangered Species
Act, and Marine Mammal Protection Act in addition to more obvious areas
like General Maritime Law and the Oil Pollution Act. He said that suits
alleging improper disposal of oiled wastes by firms hired to clean up
the mess are likely. Environmental consultant Tom Schruben noted that
crude oil contains a number of toxic chemicals, and predicted that some
cleanup workers will file lawsuits claiming they were injured by
exposure to the substance.

In addition to third-party liability claims, insurers should expect
claims from business interruption and contingent business interruption
policies, according to Curtis Porterfield, a partner with Howrey LLC,
who represents policyholders in disputes with their insurers. While a
number of coverage issues need to be addressed, he advised policyholders
to not assume there must be damage under their property policy in order
make a claim. He also noted the potential for claims from other types of
time element coverages such as civil authority coverage, ingress/egress
coverage and extra expense coverage, as well as from event cancellation
policies.

John OBrien, President of the environmental product line at Ironshore,
warned that current insured loss estimates are almost certain to rise.
He noted that insurers response to large-scale disasters typically is
to take away coverage with exclusions, and observed that some carriers
are introducing exclusions tied to specific risks related to the oil
spill. He advised insurers, however, to view the catastrophe as an
opportunity to raise awareness of exposures that may presently be
uninsured, such as the environmental exposures of hotel owners, as well
as an opportunity for product innovation.

A recording of the webinar, as well as the webinar slides, can be
downloaded for no charge from the Advisen Corner Store at http://corner.advisen.com/webinar_oil_spill_july_2010.html.
Advisen’s Deepwater Horizon Oil Spill Large Loss Cases Packet, with a
diagrammatic representation of the various organizations with potential
liability and details on more than 170 Deepwater Horizon lawsuits from
Advisen’s MSCAd large loss database, is available for $399 at the same
address.

Master Significant Case and Action Database (MSCAd).

Advisen tracks significant lawsuits filed against companies and their
directors and officers in MSCAd. MSCAd is the most complete and accurate
database of such cases, consisting of over 50,000 events and over $3.9
trillion in aggregate losses. Securities cases in MSCAd represent over
10,000 cases and over $120 billion in aggregate losses.

Advisens MSCAd covers a full range of securities cases, categorized by
type. Information about suits and filing details are available for
purchase at Advisens online store, Advisen Corner, at http://corner.advisen.com/reports_topical_sec_normal_home.html
and available at no extra charge to Advisen members through their
advisen.com logins. For more information please e-mail corner@advisen.com.

About Advisen

Advisens data, analytics and news offerings are game-changers for
100,000 commercial P&C professionals. For Underwriters, Reinsurers,
Brokers and Risk Managers, the resources of Advisen provide productivity
and insight into underwriting, marketing, broking and purchasing
commercial insurance. Configurable applications allow Advisen to
customize each solution and/or craft special offline delivery, too