Lloyd’s count the cost of BP oil spill

Lloyd’s of London’s has estimated that the Deepwater Horizon explosion in the Gulf of Mexico has net claims that will cost somewhere between £210m and £420.

The update from the insurance market came at the same time it became known that over half of Lloyd’s market syndicates had taken legal action against BP, which was the company that leased the rig when it exploded in the Gulf in April damaging the waters and causing the death of 11 people.

Syndicates are launching an attack to block the efforts of BP to claim cover from the owner and operator of the rig, Transocean.

BP, which does not have any external insurance that can be used towards the accident, is attempting to file a claim against the Transocean policy valued at $700m.  However, legal documents that were received via a Houston court, 38 of Lloyd’s syndicates have rejected the claim by BP.

Syndicates of Lloyd claim that BPs leasing contract for the rig specifies that insurers are only responsible for the actual rig damage, not to for any pollution that may be caused if a leak occurs.

BP stated this morning that it is still waiting for diagnostic tests to come back that will show that a plan to plug the leaking oil will work.

BP stated that the system used to take the pollution out of the water has never been done at a 5,000 feet water depth before therefore it cannot be guaranteed to work.

It is estimated that the well leaks about 5,000 barrels of oil each day.