“With spot market crude oil prices sitting above $100 for many weeks now – and at one point the highest levels since 2008 – insurance policy limits need to be under constant review to ensure that full value coverage remains in place. Many companies in the sector should be encouraged to review if an increase in their primary policy is required or at least ensure that their policy is on a first loss basis. With the UK energy security strategy published yesterday, which seeks to reduce reliance on Russian oil, this will continue to have a major impact on the global economy and prices may further rise on both oil and gas supplies. Companies impacted include those producing and transporting crude oil, oil derivatives and gas as well as those offering storage facilities. Failure to review and purchase sufficient limit may leave some in the energy sector underinsured as asset values exceed insurance limits.
“Companies, in particular, need to be aware of the risks this surge in oil and gas prices poses – primarily in terms of their assets being underinsured. Companies affected should first revisit the cover conditions in their policies to identify any potential underinsurance. They should also look to introduce measures to reduce their risk exposure whilst seeking to increase the insured limits with their incumbent insurer.”
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