Recent estimates by Moody’s predict that insured losses from the British Petroleum (BP) oil spill in the Gulf of Mexico will ultimately reach $1.4 to $3.5 billion.1 The consensus in media reports is that this estimated loss is within the range that the insurance and reinsurance markets can bear without broad impact across insurance markets in general. Nevertheless, reports since the spill also indicate that property insurance rates for oil rigs operating in shallow waters have increased by 25 percent and premium rates for deepwater rigs have increased by as much as 50 percent.2
When discussing the BP oil spill, the overwhelming concern is for the impact to the environment as well as the persons injured by the explosion of the Deepwater Horizon and the release of millions of gallons of oil into the Gulf of Mexico. But the spill has also reportedly caused millions if not billions of dollars in damages to businesses in the Gulf Coast states, including Florida, Louisiana, Texas, Alabama and Mississippi, particularly in the tourism, fishing and restaurant industries.
