By Eric Johnston
QBE Insurance has allayed investor fears about the prospect of spiralling payouts linked to the Deepwater Horizon oil disaster in the Gulf of Mexico, saying its exposure is well contained.
This continues QBE's run of luck in writing risks against global catastrophes. It has avoided the full impact of a string of costly disasters this year ranging from earthquakes in South America to savage hailstorms across Australia.
QBE famously emerged as just one of a few global players to sidestep the full exposure to hurricane Katrina, which hit the US Gulf states in 2005, even though it had a substantial US commercial property book.
QBE this year has set aside $1.3 billion for payouts linked to large-risk and catastrophe claims, but the insurer has spent only a third of this on claims even though this year is shaping as one of the most costly for the global insurance industry, with payouts of more than $US41 billion ($A49 billion).
While QBE provides insurance cover for oil rigs, the insurer has told investors it had significant reinsurance protection for any claims relating to the disaster in the Gulf of Mexico. This suggests QBE's liabilities to the spill - if any - will be capped, as global reinsurers would picking up the tab for outstanding claims.
The Gulf of Mexico spill is one of the largest offshore spills in the US. Since the oil well blowout on April 20, BP has struggled to contain the oil gushing into the sea.
BP is self-insured against the accident, but locked in a legal battle to seek some payouts from insurance cover held by the Deepwater rig operator Transocean. QBE is one of three dozen insurance syndicates that provide cover on the rig.
Analysts have estimated total insured losses from the accident could reach more than $US3 billion, although some have forecast the final bill could run to double figures.
Coming on the heels of IAG's warning of a $425 million one-off charge related to rising claims in the British car insurance market, QBE said it had enough funds set aside to cover payouts.
British insurers have been paying out more on car accidents because of what the industry terms ''claim farming'' - that is, lawyers acting on a no-win-no-fee basis. This has led to more litigation and higher injury payouts.
At the end of April, QBE named the Deepwater disaster as one of several catastrophes it had accounted for so far this year. This includes the Haiti earthquake, windstorms in Europe, the Chile earthquake and savage hailstorms in Melbourne and Perth.
Despite mounting payouts, QBE said it still had $810 million to cover further catastrophic losses.
The spill is already causing substantial corporate damage for BP, the operator of the Deepwater Horizon oil rig. BP has now lost a third of its sharemarket value.