Combining Legal, Risk Management and Insurance Expertise
Problem:
An oil company owned petroleum terminals in California and the Phillipines. To transport their products around the world, they owned a fleet of barges and chartered space in oil tankers.
Their insurance program was in costly non-compliance with Phillipine insurance regulations and U.S. oil spill laws.
Overall, the insurance program was priced above market rates, and gave them dangerously inadequate coverage.
Action:
We were called in to consult and rectify the situation.
We advised the company that besides having to comply with the federal financial responsibility requirements under Oil Pollution Act of 1990 (OPA'90), oil companies operating in California also had to comply with California's Oil Spill Response Act (for which we had previously helped draft insurance clauses).
Our analysis of their contracts led to recommendations to re-write their strorage and transportation agreements. This transferred some of the risk to their contract-partners and reduced their exposure to liability and property damage.
Finally, we arranged for an insurance company licensed to transact business in the Phillipines to write a "fronting" policy to comply with local requirements.
Results:
Following our advice, our client entered in a Protection & Indemnity Club, which gave them comprehensive coverage for the risks of marine spills.
Recategorizing the exposures resulted in a complete re-rating of their liability and cargo policies and substantial reductions in insurance costs. The overhauled insurance program now complied with U.S. and Phillipines regulations.
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