I assume BP will have some financial liability for the inevitable enviromental catastrophy off Louisiana coast? But certainly they carry insurance?
BP does not carry insurance for oil spills. They are self insured.The losses to BP from the Macondo Well explosion could exceed $5 Billion. That could make for a tough 2nd quarter. At this point, it's anyones guess what it will do to the dividend.
It would not surprise me that BP self insures this risk to some degree...but I would be shocked if they do not have some level of coverage. If they have a risk manager, he/she must have structured reinsurance agreements to get some coverage above a certain loss level...essentially giving BP a huge deductible. This level would most likely be on a per incident basis as well as total annual basis.
For example Reinsurance might kick in if any one incident exceeds $1 billion or any grouping of incidents in a year exceeds $2 billion. These levels would depend upon what levels company is comfortable with.
If BP hasn't done this do some degree then Directors of the company could be breaching their fiduciary duty to shareholders.
"BP is responsible for the cleanup - a problem that, for now, at least, is continuing to grow. The UK oil company does not have insurance for oil spills, so will have to cover those costs itself."
"If there was negligence, it would appear to be down to the subcontractor, Transocean, which was operating the rig. On the other hand, BP is the licence holder, so it has accepted full responsibility for closing the well down and cleaning up the mess."