Book contents
- Frontmatter
- Contents
- List of Figures and Tables
- List of Contributors
- Preface and Acknowledgements
- List of Abbreviations
- 1 Introduction
- 2 Offshore-Related Damage: Facts and Figures
- 3 Analysis of Existing Legal Regimes
- 4 Pooling Mechanisms for Offshore Liability
- 5 The Use of Financial Market Instruments to Cover Liability Following a Major Offshore Accident
- 6 Potential of Financial and Insurance Instruments to Cover Liability Following a Major Offshore Accident
- 7 Towards Optimal Liability and Compensation for Offshore Oil and Gas Activities
- 8 Concluding Remarks
- References
- Appendix 1 Overview of Interviews with Stakeholders
- Appendix 2 Checklist for Country Studies
- Appendix 3 Oil Pollution Act Liability Limits, 2012
- Index
4 - Pooling Mechanisms for Offshore Liability
Published online by Cambridge University Press: 20 October 2016
- Frontmatter
- Contents
- List of Figures and Tables
- List of Contributors
- Preface and Acknowledgements
- List of Abbreviations
- 1 Introduction
- 2 Offshore-Related Damage: Facts and Figures
- 3 Analysis of Existing Legal Regimes
- 4 Pooling Mechanisms for Offshore Liability
- 5 The Use of Financial Market Instruments to Cover Liability Following a Major Offshore Accident
- 6 Potential of Financial and Insurance Instruments to Cover Liability Following a Major Offshore Accident
- 7 Towards Optimal Liability and Compensation for Offshore Oil and Gas Activities
- 8 Concluding Remarks
- References
- Appendix 1 Overview of Interviews with Stakeholders
- Appendix 2 Checklist for Country Studies
- Appendix 3 Oil Pollution Act Liability Limits, 2012
- Index
Summary
Earlier discussion has shown that offshore accidents have the potential to cause substantial damage and corresponding liability claims. How liability of a catastrophic scale could be covered creates a big challenge for the offshore facilities. This chapter focuses on risk-pooling mechanisms for damage compensation following an offshore accident. Various approaches are taken to pooling. First, the theoretical basis for pooling will be sketched as well as the differences with insurance (4.1). Next, attention will be paid to the Offshore Pollution Liability Agreement (OPOL), which came into effect on 1 May 1975 and is specifically focused on offshore pollution (4.2). Then attention will be paid to two pooling mechanisms for offshore-related damage, Oil Insurance Limited. (OIL) and Oil Casualty Insurance, Ltd. (OCIL) (4.3). We have already discussed civil liability and fund conventions. Compensation for vessel-based pollution is largely realized via the Protection and Indemnity (P&I) Clubs, which are equally based on risk pooling and therefore deserve a discussion (4.4). Next, tention will be paid to risk-pooling schemes in other high-risk sectors. In this respect, the focus will be especially on risk pooling in the nuclear sector (4.5). The failure of large pooling mechanisms in the nuclear sector also provides important lessons for the offshore industry. Some concluding observations finish the chapter (4.6).
In this chapter, existing pooling mechanisms for offshore liability will be discussed. However, this chapter does not yet address the extent to which these pooling mechanisms are used effectively to cover liability following a major offshore accident. The coverage of liability in practice will be dealt with in Chapter 5. Overlap will, however, as far as possible be avoided by sketching how the various pooling mechanisms work in this chapter; Chapter 5 will address the extent to which the particular mechanisms are used in practise. In this respect, the results of interviews with stakeholders also will be taken into account.
From the outset, it is worth mentioning that a large number of insurance and re-insurance pools do exist. Recently, a study has been commissioned by the European Commission concerning co-insurance/re-insurance pools. The study identified fifty-one pools, many of which focus on catastrophic risk (e.g. nuclear, environmental, terrorism).
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- Publisher: Cambridge University PressPrint publication year: 2016