Our analytics specialists have many years’ experience working with large clients to evaluate insurance structures involving the Oil Insurance Limited (OIL) mutual.

We offer independent advice, detailed actuarial modelling, and the benefit of our many years’ experience advising on the OIL pool, to both wholesale and retail clients. Over the years, we’ve developed a deep understanding of the long-term nature of OIL membership and the need to find the right balance between the value of OIL’s capacity and the longer-term commitment required to accept a share of overall pool losses. 

Over the past 45 years, Oil Insurance Limited (OIL) – a Bermuda-based mutual insurer – has been a major source of insurance capacity for big energy companies. OIL insures almost US$3 trillion dollars of assets for over 50 members, providing up to $400 million per-occurrence limit and $1.2bn per event on a very broad policy wording (as at Dec 2016). OIL uses a pooled approach to risk compared to the traditional insurance market, which means that members must take a carefully considered view of how to use the various types of insurance available to them through the pool and the open market.

Independent advice about the OIL pool

OIL offers coverage that is flexible across all energy insurance sectors (upstream & downstream energy, pipelines, refineries, renewables, chemicals & petrochemicals, mining and construction projects), and the process for declaring information is greatly simplified. On the other hand, you’re locked in for 5 years and can be sharing the fortunes of a smaller pool of buyers. So should you join – and if you do, how can you make best use of it? We will work with you to evaluate:

  • If you’re an energy company thinking of joining the OIL pool, what are the pros and cons of membership?
  • What percentage of your insurance should be sought from the pool?
  • Should the pool be used at the bottom or the top of your insurance programme?
  • What level of premium should you pay, and what other costs will you face?
  • How can you optimise your capacity in the pool?

Why talk to Alesco RMS?

  • We’re independent – we don’t have any agreement with OIL, although we know them and meet with them regularly
  • We’re experienced – we’ve spent over 25 years modelling this capacity and advising large energy companies
  • We offer the big picture – explaining the advantages and disadvantages of membership, and the implications for you should any member/s make a claim
  • We do our own actuarial modelling – our modelling is very precise, so you’ll benefit from seeing your predicted exposure and the level of premium you would pay under different loss scenarios
  • We interpret OIL’s information – and offer you our own opinions and advice accordingly.

How we’ll work with you regarding OIL membership

To review whether, and to what extent, OIL should be part of your insurance programme, we will usually:

  • look at your balance sheet to examine your key exposures relating to gross assets across 8 key business sectors
  • develop ‘shadow pricing’ for a standard OIL entry of $400m (excess of $10m), based on projected pool share and historical OIL pool losses
  • test alternative uses of OIL capacity (for example, quota share, higher attachment points, ventilated limits)
  • review the long-term implications of OIL membership – such as the volatility of pool losses, current and future composition of the OIL pools, voting and dividend rights, accrual issues around the theoretical withdrawal premium (TWP), and withdrawal conditions and costs
  • explore the relative costs and benefits to you of coverages automatically offered by OIL, which aren’t routinely offered by the traditional energy insurance market, or which are heavily sub-limited (for example, wind storm, construction, terrorism, pollution, cyber etc).

Please get in touch

Are you an OIL member? Or thinking of joining? Talk to our OIL pool specialists for independent advice on membership, exposure and benefits. Our key contacts are listed below.

View our glossary of insurance terms

Oil Advisory Support Key Contacts