Insurance premiums for offshore drilling operations are expected to jump significantly in the wake of the Gulf oil spill disaster, Moody's Investors Service said.
Early reports have indicated that premiums for property coverage have risen 15 percent to 25 percent for rigs operating in shallow waters and are up to 50 percent higher for deepwater rigs, according to the ratings agency.
If additional losses occur during the hurricane season, it could boost prices even higher, Moody's stated in a report released Thursday.
Moody's estimated insured losses from the damaged well between $1.4 billion and $3.5 billion but the full extent of the damage is still undetermined.
"Pricing for offshore energy liability insurance will likely also trend higher as insurers and reinsurers take stock of their losses and re-evaluate the complex risks associated with drilling in deep waters," James Eck, a Moody's vice president, said in a news release.
BP PLC is working to stem oil that continues to spew from a drilling rig which exploded April 20, killing 11 workers. The company said Friday that a cap it placed on a portion of the blown-out well has stemmed but not stopped the flow of oil.
BP leased the rig from Transocean Ltd.
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