The insurance and ultimately reinsurance market loss caused by the damage to and resulting production shutdowns of the rKwame Nkrumah FPSO (floating production, storage and offloading) vessel operating on the Jubilee oil field, Ghana continues to rise thanks to ongoing business interruption.

The Kwame Nkrumah floating production, storage and offloading vessel (FPSO), operated by Tullow Oil on the Jubilee oil field off Ghana, Africa, experienced a fault to a bearing on the turret in March 2016, causing a loss of production of approximately 15% of output per day.

That first triggered an insurance policy claim under a Hull & Machinery cover for Jubilee which Tullow Oild confirmed and also triggered a business interruption cover as well, given the need to reduce production and also shutdown completely.

As a result, it became one of the largest man-made or industrial insurance and reinsurance losses of 2016, but given the ongoing loss of production the business interruption losses have continued to flow.

As we explained last year when we last wrote about this event, industry loss estimates for the impact to insurance and reinsurance markets suggested a total impact of up to $1.5 billion to the market from the Jubilee oil field FPSO loss, but that was only including business interruption to mid-2017 and further shutdowns and reduced production means Tullow Oil has continued to claim.

Another $107.8 million of business interruption insurance claims were made in H2 2017, then a further $129.3m in H1 2018 and Tullow Oil expects to continue to benefit from this boost through much of the rest of this year, it appears while production continues to be affected.

Another shutdown is anticipated for the second-half of this year, in order to position the FPSO correctly.

As a result of the business interruption losses continuing into 2018, it seems likely the insurance and reinsurance market loss from this Jubilee oil field FPSO damage and subsequent loss of production is likely to near the $1.75 billion mark (a loose estimate based on what we understand about the event).

Collateralized reinsurance and retrocession markets that had any exposure to this event are understood to largely have commuted their contracts, meaning the BI loss creep is unlikely to create a hit to ILS funds. But it will hit some traditional insurance reinsurance and retro providers, where coverage remains intact.

Apparently Property Claim Services (PCS) has designated this event through its PCS Global Marine & Energy product and as a result users of the service will be able to track the development of the industry loss, based on actual claims data gathered from the industry.