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Not a problem, just require firms that have the potential to inflict substantial costs on the rest of society to carry insurance against such a catastrophe. Th

by riffer 16y ago

Not a problem, just require firms that have the potential to inflict substantial costs on the rest of society to carry insurance against such a catastrophe. The pricing mechanism on the insurance will act as an incentive to minimize the real risk to society.

jonknee 16y ago
But that's regulation... Lots of it actually because the insurance companies need regulated too (lest they default when a huge oil spill occurs).
anigbrowl 16y ago
Two problems here. 1. they do carry insurance. Their fuel assets are insured by Jupiter Insurance ltd. ( a wholly owned subsidiary of...BP itself. According to their annual report, they consider external insurance a poor economy and carry as little as possible - basically $1 billion per incident, figuring that any overages can be paid for out of revenues. Awesome. http://www.bp.com/liveassets/bp_internet/globalbp/STAGING/global_assets/downloads/I/BP_20-F_2009.pdf http://www.bp.com/liveassets/bp_internet/globalbp/STAGING/gl... 2. OK, so make them carry more insurance...but then you're back to the dead hand of government regulation or whatever you want to call it. And with the best will in the world, sometimes events take place which are beyond our ability to predict. I imagine the government's recent cautious endorsement of more offshore drilling was based on a careful look at the number of rig disasters in recent years, and the assumption that the industry was sufficiently mature to appreciate the importance of risk management. It's kind of ironic that this occurred right after Obama upset the 'ban all drilling' crowd.
MichaelSalib 16y ago
Sure! BP could just get an insurance policy from a reputable insurance provider like...AIG. What could possibly go wrong? I mean, a reputable insurance company like AIG would never, ever, ever offer policies for complex products that it did not fully understand for prices so low that it couldn't cover the risks involved. Insurance company officials would never ever ever cut lots of fundamentally unsound deals in exchange for big bonuses. And even if they did, such behavior could never blow up and eliminate a few trillion dollars of value in a massive economic collapse. That's totally absurd. Really now, this "solution" boils down to "assume the existence of insurance companies that act radically differently from any insurance companies we have experience with"...tis much like "now, assume a can opener".

by riffer 16y ago

jonknee 16y ago

But that's regulation... Lots of it actually because the insurance companies need regulated too (lest they default when a huge oil spill occurs).

anigbrowl 16y ago

Two problems here. 1. they do carry insurance. Their fuel assets are insured by Jupiter Insurance ltd. ( a wholly owned subsidiary of...BP itself. According to their annual report, they consider external insurance a poor economy and carry as little as possible - basically $1 billion per incident, figuring that any overages can be paid for out of revenues. Awesome. http://www.bp.com/liveassets/bp_internet/globalbp/STAGING/global_assets/downloads/I/BP_20-F_2009.pdf http://www.bp.com/liveassets/bp_internet/globalbp/STAGING/gl... 2. OK, so make them carry more insurance...but then you're back to the dead hand of government regulation or whatever you want to call it. And with the best will in the world, sometimes events take place which are beyond our ability to predict. I imagine the government's recent cautious endorsement of more offshore drilling was based on a careful look at the number of rig disasters in recent years, and the assumption that the industry was sufficiently mature to appreciate the importance of risk management. It's kind of ironic that this occurred right after Obama upset the 'ban all drilling' crowd.

MichaelSalib 16y ago

Sure! BP could just get an insurance policy from a reputable insurance provider like...AIG. What could possibly go wrong? I mean, a reputable insurance company like AIG would never, ever, ever offer policies for complex products that it did not fully understand for prices so low that it couldn't cover the risks involved. Insurance company officials would never ever ever cut lots of fundamentally unsound deals in exchange for big bonuses. And even if they did, such behavior could never blow up and eliminate a few trillion dollars of value in a massive economic collapse. That's totally absurd. Really now, this "solution" boils down to "assume the existence of insurance companies that act radically differently from any insurance companies we have experience with"...tis much like "now, assume a can opener".