NU Online News Service, June 9, 2:35 p.m. EDT
ORLANDO, Fla.--The Deepwater Horizon Drilling Platform explosion and subsequent oil spill in the Gulf of Mexico was not a risk management issue, an insurance executive said.
During a panel discussion at the Public Risk Management Association's annual conference held here, moderator Ron Hays, outgoing president of PRIMA and risk manager of the Calcasieu Parish, La., School Board, noted that risk management has been blamed by many for the British Petroleum oil spill.
But Patricia H. Roberts, president and chief executive officer of Genesis Underwriting Management Company, said she believes risk management was not to blame and that the disaster was a "one-in-10,000-year event." She said many people were involved in the decisions leading up to the spill.
Regarding risk management at BP, she said, "They have to look at the tail risk and how much additional safety do you need."
Ultimately, there was not enough safety, she added, noting that regulatory changes are needed.
Michael F. Klein, senior vice president of business insurance and president of Travelers Middle Market Business, said the situation is complicated because the rig is a joint venture, with other partners and contractors involved.
He added that the outcome of the disaster will be better continuity planning.
Patrick M. Gallagher, managing director of worldwide property and casualty with Gallagher London, recalled meeting with the risk manager of BP only a month before the Gulf Coast disaster. He said that BP is self-insured, but that the risk manager there hired outside consultants.
But while the consulting included several projects with brokers, Mr. Gallagher said it did not include crisis management.
The three agreed that a hurricane in the gulf would substantially increase the complexity of claims because of the possibility that oil could be washed ashore into homes, schools and commercial buildings.
But they predicted that the issue of determining storm surge or flood would be controversial, as it was after Hurricane Katrina in 2005.
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