American Oil and Gas Reporter - December 2020 - 66

against oil and gas companies. These factors, combined with a
decade of consistent rate reductions, have caused oil and gas insurers to struggle with profitability and revert to " Underwriting
101, " i.e., underwriting for a profit.
Despite the challenges, insurance for oil and gas companies
is still available and capacity, albeit more limited, is adequate
for now. Navigating the market and putting a company in the
best light for underwriters is where companies and their brokers
should be spending their time. Starting the renewal process
very early on and developing a cohesive, well thought-through
strategy for approaching the market will pay dividends.

Oil and gas companies have a wide range of
risk exposures. In the current business envi-

ronment, what are the biggest areas of concern for
small- to mid-sized producers/operators in terms of
having adequate insurance in place for all business
risks and contingencies? How can operators be sure
no gaps or blind spots exist in their insurance programs?
How can they work with third-party service providers/contractors to ensure all necessary coverages are in place
for well site operational risks?

World-Class Assets . . .
First-Class Innovation . . .
America's producers are ready with the
right assets, the right skill sets, and the
right technologies to get the job done.
The American Oil & Gas Reporter
provides the right combination of
business, ﬁnancial and technological
information to enable its readers
to meet their objectives.

www.aogr.com

For your 2021 AOGR Media File
please call 1-800-847-8301, or visit
www.aogr.com/media-center/media-ﬁle

66 THE AMERICAN OIL & GAS REPORTER

PLUMER: With respect to oil lease operators and producing
companies, the most common areas of concern are contractual
risks, pollution, navigating the current insurance market and
bonding. An emerging exposure, and a common blind spot
for many companies, deals with cyber-risks. Cyberinsurance
is available and a line of coverage that should be seriously
considered.
We feel it is difficult to know where gaps in coverage may lie
with an operator without fully understanding their contractual
liabilities. Despite a few states having very strong anti-indemnification statutes, most of the oil and gas industry's onsite
accidents tend to revert to how the master services agreement
lays out insurance and indemnity requirements. It is important
as an operator that your MSA's indemnity structure aligns with
each of the on-location contractors that you or a contractor have
hired. It's important, especially if there are multiple MSAs
having been signed by contractors on the same location (contractors
hiring contractors), that the indemnity scheme aligns.
In an industry where margins are thinner, operators and contractors alike are looking to reduce their requirement to indemnify
another party. It's important these indemnities are understood
and aligned to avoid potential frustration and balance sheet
damage in the event of a claim. A good broker can help oil and
gas companies look beyond just the required insurance limits
section and dig deeper into the indemnity scheme.
Pollution is an area where we often see gaps in coverage. A
surprising number of oil and gas companies do not buy environmental liability insurance, but instead depend on the sudden
and accidental pollution coverage afforded under their general
liability policy for coverage. Because the coverage available
under general liability is subject to strict discovery and reporting
provisions, any pollution event where the discovery and reporting

http://www.aogr.com http://www.aogr.com/media-center/media-file

American Oil and Gas Reporter - December 2020

Table of Contents for the Digital Edition of American Oil and Gas Reporter - December 2020