This week Canopius is exhibiting for the second time at the annual conference of APPEA (Australian Petroleum Production & Exploration Association). One of the exciting things about our return this year is that we are part of the poster display of research papers, looking at developments relating to the oil and gas industry.
You won’t be surprised if I point out that offshore installations are exposed to several natural hazards. The greatest is severe weather caused by hurricanes and cyclones. Such storms can be devastating, causing wide-spread damage and financial loss. Insurance companies offer a range of products that insure against potential losses, including physical damage, control of well, sue & labour, removal of wreck, business interruption and liability.
Therefore our paper describes the development of the first stochastic natural catastrophe model for offshore north-west Australia. Its development is designed to allow the sustainable and reasonably priced supply of insurance, which is essential to the further extension of exploration and production activities and investment in Australia.
I don’t want to give away too much here – if you’re at APPEA, have a read of our display poster or pop along to our stand 196! – but I can say this: the model provides the insurer with quantitative results that can be used for several purposes such as underwriting, design of insurance conditions, evaluation of the profitability of each policy, or the entire portfolio and can assist in deciding the requirements for reinsurance, capital allocation, etc.
The model quantifies a major risk, and hence will assist in risk transfer activities, for example through insurance, thereby contributing to the continued development of offshore petroleum exploration and production on the Australia North West Shelf.
The other thing we are talking about at APPEA is a new risk transfer product in the pipeline, which is designed to afford some protection against well cost overruns. We would value your opinion on how this kind of risk transfer could help you de-risk well and marginal field development proposals.
Posted on 15th May 2017.