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Fitch Ratings Says Gulf Oil Spill Could Result in As Much As $6 Billion in Insured Losses

Posted on 21 Oct 2010

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Fitch Ratings Ltd. says that the Gulf of Mexico oil rig spill could end up costing the insurance industry as much as $6 billion.

The Deepwater Horizon explosion was “a material event for the reinsurance sector,” Chris Waterman, a managing director with Fitch, said today during a presentation in Zurich.

Even though BP Plc, which didn’t buy insurance, will cover the majority of expenses linked to the clean-up, the disaster may cost insurers between $4 billion and $6 billion, Waterman said. The total economic loss is $35 billion, he said.

Swiss Reinsurance Co., the world’s second largest reinsurer, estimated insured losses in June to be as much as $3.5 billion, making it the biggest man-made insurance loss since the Sept. 11 terrorist attacks in New York. Insurers are charging 50 percent more for policies covering oil rigs after the explosion in April triggered the worst spill in U.S. history, Moody’s Investors Service said on June 3.