The Role of Insurance and Reinsurance
The off-shore and on-shore operations for the exploration and exploitation of oil and its transport require very expensive insurance cover. Various policies could be effected to cover construction risks, production and storage against fire, loss of profits, third party liability, workmen’s compensation and employer’s liability. Before considering the types of insurance effected in the carriage of oil, it is necessary to outline the conventions, establishing liability and those limiting such liability. The important conventions in the respect are: the Convention on Civil Liability for Oil Pollution Damage (CLC), 1969; the Convention on Limitation for Maritime Claims, 1976; and the Fund Convention, 1971. Owners of oil tankers felt that it was not fair that they carry all the burden in case of oil pollution and that the cargo-owners, i.e. the oil industry, should share in this respect. The risks in off-shore operations which need to be covered by insurance could be described as political, economical, technical and operational.