Growth in the Oil & Gas Industry and What it Means for Insurance

By Brett Amick, Assistant Vice President

The last few years have seen a massive growth in oil & gas production and exploration in the United States. The insurance industry has experienced major growth in payroll and revenue on the contractor and facility operator side of things. Now that they have found it and figured out how to get it out of the ground, what do we do with it until the refineries are ready for it?

The answer to that question is simple—you must have a mid-stream to support the production. Over the next few years you will see many current facilities adding storage capacity to their current locations and many new storage and processing facilities being built to support the growth from the field. This will mean that existing companies will grow to accommodate the needs of their clients. It will also mean that many new start up companies will form as people try to get their piece of the pie.

How do we deal with these issues from an insurance perspective? Well the exposures are clear, we have third party exposures as our contractors work on their clients’ sites. We have on and off site exposures for the facilities our insureds own and operate. The transportation exposures for moving the product from the field to facilities or pipelines and the completed operations and products exposures for all of the above.

The normal response is to take these accounts to the typical standard lines or Excess and Surplus lines markets that offer limited coverages. These markets have been available for a long time, but by going this route, is your insured going to benefit from limited contractual coverage? Limited sudden and accidental coverage? Action-over exclusions and limited Excess policies that do not truly follow form the underlying policies? Will these companies be able to adapt to your insureds’ needs when they require work within 50’ feet of a railroad or when they find they have a transportation exposure?

The real answer to our insureds’ needs is to provide broad form coverage in order to comply with certificate holders and the limit requirements they need. Beacon Hill Associates is in its 25th year of specializing in pollution accounts working with the carriers who have the ability to respond to your clients needs. It is our goal to provide our retail agency partners with access to long term energy carriers with solid financial ratings and strong underwriting philosophies.
For more information, or to discuss the growing oil & gas industry, call us at (800) 596-2156 or email us.