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Reinsurers and insurers have paid out less than $1 billion on British Petroleum oil spill claims, and the total market loss is expected to be between $3.25 billion and $4 billion, said Holborn Corp.
In the New York-based independent reinsurance brokerage firm’s second-quarter catastrophe update, Holborn estimates $6.5 billion to $9 billion of direct insured losses from eight events it monitored during the quarter.
Most of the losses due to the explosion of the Deepwater Horizon oil rig leased by BP will be shouldered by self-insurance.
BP has paid $128 million to 41,000 parties as of June 28, Holborn said. The oil production giant has been ordered to establish a $20 billion fund to pay claims. BP has spent $2.5 billion in direct expenses to clean the oil spill, Holborn said. The company said it will cover all related costs.
Liability for other companies involved in the oil drilling venture on the Deepwater rig needs to be established. Five of the companies involved purchased about $2 billion in liability limits from the market and could be liable in subrogation, Holborn said.
Other notable expected losses in the second quarter were due to April riots in Thailand, with estimated insured losses of over $1 billion; floods in Nashville, Tenn. in May, with estimated insured losses of $1 billion; plane crashes in Libya and India, both with estimated insured losses of $100 million; and European floods, with estimated insured losses of less than $1 billion.
The year-to-date losses have been at least $25 billion, with the Chilean earthquake highlighting first-quarter losses. This is well above the average pace, Holborn said.