Hutchings Supports New Oil Mutual
Insurance costs for energy exploration companies could rise significantly if all of the recommendations in the US Presidential Commission into the Deepwater Horizon disaster are enacted — and one Bermuda company says it would support the creation of a new mutual to offer additional capacity.
OIL Insurance Ltd., the Hamilton-based energy mutual which provides oil pollution liability coverage would welcome another mutual in the marketplace, the insurer’s Bermudian vice-president and COO George F. Hutchings told “Business Insurance” in an exclusive report.
“We would wholeheartedly support any mutual” formed to provide additional capacity, Mr. Hutchings said. But for it to be successful, there would need to be commercial market involvement in some fashion, he added.
OIL offers up to $250 million in per occurrence oil pollution limits to its members. If the liability cap is significantly increased for drillers as a result of the upcoming report on last year’s BP oil rig disaster in the Gulf of Mexico, it will require more capacity than is available in the marketplace, added Mr. Hutchings who recently replaced David Ezekiel as chairman of the Association of Bermuda International Companies.
Mr. Hutchings started his professional career with Chase Manhattan Bank in 1981 as a loan officer in the petroleum group. From there, he joined Infotechnology Inc., a New York based venture capital firm that specialised in investing in early stage technology based companies.
In 1990, he returned to Bermuda joining Zurich International (Bermuda) Ltd. as its vice president of underwriting and marketing just as the market for structured insurance and reinsurance products began to develop.
A year later, he joined Centre Solutions (Bermuda) Ltd. as vice president of underwriting to help the company develop its structured insurance underwriting capabilities. He worked for Risk Intermediation Structured Capital (Bermuda) Ltd. as its executive vice president before joining OIL in 2005.
Insurance industry specialists and energy exploration firms both say there is no need for most of the recommendations in the 381-page report which is being officially released later this month.
“It is based on a false premise,” said Lee Hunt, president of the International Association of Drilling Contractors, referring to the report’s finding that systemic problems caused the Deepwater Horizon disaster. He added the report’s recommendations are not very different from safeguards energy companies already have in place.
Established last May by President Barack Obama, the seven-member National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling concluded that “human and engineering failures” caused the Deepwater Horizon explosion and fire which killed 11 workers and leaked millions of barrels of oil in the Gulf of Mexico.
