As the debate continues Neil Smith Head of underwriting for the Lloyd’s Market Association has said the core issue is to educate the politician on Capitol Hill on what the insurance market does, how it works and the ramifications of any increase in liability levels.

“The market as a whole is concerned over the implications of the Deepwater Horizon loss,” he said. “The fact that it was the first deepwater well blow out has made a lot of people reassess their risks.”

He added that the incident created a new view on the risks of deepwater drilling.

“If the authorities which licence such offshore operations had not thought that such a thing could happen then they will be doing so now. Offshore drilling comes with a risk and the authorities have to ensure they work with the energy firms and the insurance community to identify the issues and seek to mitigate them.”

On the growing likelihood that the current $75 million liability limited under the U.S. Oil pollution Act 1990 will be increased Mr Smith said the industry had to get the message across as to the role it currently plays and will be able to play in a future market with higher liability levels.

“We are very lucky at Lloyd’s as a market that we have built some strong relationships in Washington and we have been talking to the legislators. The real challenge is one of education in terms of what the insurance market does, how we operate and what we can offer.

“When any high profile event occurs the politicians will want to be heard and there are normally some statements which could be viewed as outrageous but we have to ignore the initial outcry and work behind the scenes to ensure that the industry has a voice.

“The limits could be raised or become unlimited but there is only a certain level of capacity in the market and we have to ensure the politicians are aware of the market’s ability to work with energy firms to offer coverage to a certain level and the threat to energy markets if they are put in a situation where they are unable to operate for fear of the liabilities should an event occur.”