Authors: Jennifer Lawrence*, Virginia Polytechnic Institute and State University
Topics: Environment, Hazards, Risks, and Disasters, Political Geography
Keywords: extreme energy, insurance, catastrophe swaps, disaster, oil
Session Type: Paper
Start / End Time: 12:40 PM / 2:20 PM
Room: Napoleon, Marriott, River Tower Elevators, 41st Floor
Presentation File: No File Uploaded
The Deepwater Horizon disaster was not only one of the worst environmental disasters in the United States but, it also resulted in one of the largest one-time losses to the insurance industry. The scale of the environmental and financial damage associated with this case raises questions about the role of the state and insurance markets in an era of “tough oil.” Over $270 million of the initial $560 million paid out in the weeks following the Deepwater Horizon disaster was paid by Lloyd’s, a huge hit to a single insurer. While the losses incurred by Lloyds have sparked an unwillingness for many insurers to financialize the risks of extreme energy development, in other geographies of extreme energy citizens are unable to afford to insure their own property against the environmental damages of extreme energy technologies like hydrofracking. The confounding terrain of insurance in an age of extreme energy raises questions about the role of the state in regulating the risks of extreme energy and securing against extended health and environmental damages associated with it. In this spirit, this paper explores the financial risks of extreme energy in concert with the social and environmental risks. I address the financial mechanisms that enable the development of extreme energy as well as the tools like catastrophe swaps that may allow extreme energy disasters to be redirected toward capital accumulation.