Insurance Dispute Lawyer Blog
The Wall Street Journal reports that companies in the Gulf and outside of it are not seeking insurance for catastrophe this hurricane season. Citing “improved technology and increased regulations” as rationale for avoiding the provisions, these companies still stand at some peril as hurricane season escalates. The article notes
Many energy companies are facing the late-blooming Gulf Coast hurricane season without insurance against storm damage to their offshore platforms, pipelines and drilling rigs.
Although the annual storm season has been mild so far, the first hurricane, Bill, brewed up in the Atlantic last weekend, and federal forecasters are predicting three to six hurricanes this year, one or two of which will probably qualify as major.
Consumers are less likely than in earlier years to see spiking prices if hurricanes hit, experts said, because big stockpiles of oil, natural gas and gasoline have built up in the U.S. since the recession began.
But for small and midsize energy companies, a storm’s impact could be serious, because they would have to pay for repairs out of their own pockets at a time when revenues have been shrinking because of the global slump in oil and natural-gas prices.
This seems to be similar to the gamble that states are taking for reinsurance, as mentioned in the blog here. All the more, very close attention is going to be paid to developing storms as the season rolls on and the gambles states and companies are taking either pay off or blow up in their faces.