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View Diary: The Invisible Hand Gives Deep Water Drilling the Finger (157 comments)

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  •  BP had a captive (2+ / 0-)
    Recommended by:
    Crashing Vor, Eric Nelson

    insurer, Jupiter Ins., capitalized at $6 billion.  But apparently, Jupiter did not reinsure.  And apparently, there was no excess catastrophe insurance above the Jupiter coverage (which was $700 million per event).  I wrote about it here.  Generally speaking, huge corporations who self-insure do have catastrophe policies above their own coverage, often through Bermuda companies like A.C.E. or X.L., for Bhopal type events.  Which this is.  And BP did not even have that high excess coverage.

    The purpose of insurance (and reinsurance) is to spread risk thin so that when something disastrous happens, the shock can be absorbed and a company can go on without tanking.  I think what we need to be wary of in this case is that the tab not be handed to the taxpayer.

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