Bermuda-based Torus Insurance Holdings Ltd. plans to offer $1 billion in liability limits for oil-drilling projects following the recent Deepwater Horizon oil spill disaster, the company announced at the Rendez-Vous de Septembre get-together at Monte Carlo.

The insurer said it would use $100 million in capacity from energy investment company First Reserve Corp., which helped fund its formation in 2008, and others, according to a report in Business Insurance.

Brokers Guy Carpenter and Aon Benfield have helped Torus in setting up the facility, which will also involve other reinsurers from Bermuda, the US and Europe.

In Monte Carlo, Munich Reinsurance Co., also proposed to provide up to $20 billion in limits for drilling projects.

Munich Re's programme includes annual aggregate limits of $10 billion to $20 billion for offshore oil exploration and production companies, in excess of the available limits under individual liability policies, according to Torsten Jeworrek, a member of the reinsurer's management board.

Two Bermuda energy industry mutual insurers, Oil Insurance Ltd. and Oil Casualty Insurance Ltd., already provide some of the coverage above deductibles for their members.

Jurgen Graber, a member of the executive board of Germany's Hannover Re Group, who oversees worldwide non-life reinsurance, said at least 100 oil rig projects would have to purchase the coverage for the programme to work. He told the insurance publication that Hannover Re would be willing to supply capacity, "but whatever we would provide would be within our risk tolerances".

"The Deepwater Horizon physical damage loss was straightforward; the unknown is the liability loss," said Mr. Graber. "Many parties have contributed to the platform — the rig operator, the owner, those who worked on the blowout preventer. Who has to take responsibility? As a consequence, we like the idea of Munich Re suggesting one kind of cover that would lead to a clear liability picture."

"There are other attempts to set up similar schemes.

"We hope these ideas get merged."

Other reinsurance executives gathered in Monte Carlo said more clarity was needed over the liability cap for oil incidents set by the US Senate.

The US House of Representatives has approved legislation to raise the Oil Pollution Act liability cap from $75 million to $10 billion, but the Senate has yet to act on the proposal.

Grahame Chilton, chairman of Aon Benfield, the reinsurance unit of Aon Corp. that worked with Torus and others to develop its planned solution, echoed the call for improved risk management of deepwater drilling projects.

"There is a need, but we don't know what it is yet," he said, adding that it was not known how the US Senate would act on raising the Oil Pollution Act's liability limit.