Abstract/Summary

Post the Deepwater Horizon (DWH incident, offshore energy insurance underwriters reassessed their risk exposures in response to newly perceived operational risks involving blowouts, fires, explosions, lost control of well and other non-hurricane risks. Already in the aftermath of the DWH incident, it has been noted that it would be crucial to consider the willingness of the global offshore energy insurance market to participate in efforts to establish and fix a new liability limit for environmental pollution liability insurance. In relation to the approach followed by the USA administrations, this has been fragmented, with the current administration in office introducing a moratorium on new oil and gas leasing on federal lands and waters and in terms of its policy relating to its climate agenda. Against this background, this article describes the insurance implications of environmental pollution liability in case of offshore drilling operations incidents (such as the DWH) resulting in major oil spills. In doing so it discusses in detail the legal framework and the position in the EU and draws a comparison with other jurisdictions. It also contains proposals for future measures so as to be able to offer better insurance coverage for such offshore drilling disasters, such as the introduction and collection of data on damages, or an EU wide and an international agreement especially focusing on offshore-related incidents with a transboundary character, as well as a mechanism to facilitate early compensation payments to potentially vulnerable victims.