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ENERGY & POWER PRACTICEThe Oil Insurance Limited(OIL) Companion 2019A complete guide to the biggest Bermuda basedenergy mutualPUBLISHED FEBRUARY 2019

Contents Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12019 News Update. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5Coverages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6Automatic Coverages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7OIL Occurrence Trigger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8Limits and Deductables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8Rating and Premium Plan (R&PP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11Prospect Premium Indications. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17Considerations for Membership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17Membership Application Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21Timing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22Contractual Premium Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22Designated Named Windstorm (DNWS) Occurrence Definition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22Designated Named Windstorm (DNWS) Coverage Restrictions and Premium Obligations . . . . . . . . 23Windstorm Coverage in Other Geographic Regions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24General Conditions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24Non-Owned Property Sublimit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26Notice of Loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26Claim Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26Offshore Pollution Liability Agreement (OPOL) Endorsement (and OPOL Certification) . . . . . . . . . . . 26SPLIT Policies and Policies by Geographic Region. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27Ventilated (SPLIT) Limit Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28"Wraparound " or "OIL Wrap" Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28OIL Endorsement No.5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28Frequently Asked Questions (FAQs). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29UGA Additional Commentary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31Statutory Capital and Historic Loss Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32i The Oil Insurance Limited (OIL) Companion 2019

IntroductionMarsh’s OIL Companion offers a balanced, objective, and in-depth analysis of OILmembership from a broker’s perspective. It examines both the advantages and possibledisadvantages that merit consideration in the evaluation of OIL membership.This document is designed for risk professionals that are interested in, or deal with, OILand is structured to provide a quick reference to important OIL considerations. The tableof contents below facilitates navigating those topics and additional detail is providedwithin the frequently asked questions “FAQ” and the document’s appendices.For further in-depth analysis of OIL, its underwriting methodsand full coverage specifications, plus company financials andliterature, including full details on all changes, we recommendthat you visit the official OIL website www.oil.bm.The website contains the most up-to-date information and hasbeen a valuable source for much of the information used incompiling this OIL Companion.Marsh strongly encourages any party with an interest in orengagement with OIL (be that clients, prospects, or insurers) toregister for the OTA (OIL Technical Accreditation) online trainingprogram which can be accessed through the OIL website.Marsh 1

2 The Oil Insurance Limited (OIL) Companion 2019

2019 News UpdateSignificant points of interest as we look back at the past year are as follows: Reflecting shareholders’ increasingly diverse energyinvestments, OIL added a new sector for wind and solarrenewable energy, effective January 1, 2018. The wind andsolar renewables sector is currently weighted (and thereforepriced) the same as the electrical utilities sector and OIL iscurrently reviewing the loss data from two members withrelevant exposures and will adjust the sector weightingaccordingly. As part of the annual sector weighting review,the electrical utilities sector weighting, which had not beenchanged for quite a while, was updated. As a result, therehas been a significant reduction in the electric utilities sectorweighting which OIL hopes will make it more attractive to thepower/utility segment. OIL continues to consider (including conducting a shareholdersurvey last autumn) increasing the current US 400 millionlimit to US 500m; however, for 2019, it has been decidedto keep the current limit offering. Currently, OIL allowsshareholders the option of choosing standard limits betweenUS 300m and US 400m. Any limits purchased belowUS 300m must be accompanied by a warranty that theshareholder is not purchasing any other insurance excessof OIL. Effective July 2018, OIL agreed, in response to a Marshinitiative, to expand acceptable shareholder provided securityinstruments to include surety bonds; please contact yourMarsh representative for the surety bond format. Also in July 2018, OIL simplified the split policy requirements(see the split policy section on page 30) to make them lessrestrictive for those shareholders hoping to utilize OIL toaddress joint ventures’ insurance needs. Late 2017, OIL announced that offshore Gulf of MexicoDesignated Named Windstorm (DNWS) coverage would beeliminated effective January 1, 2018. In a resolution approvedat the July 2018 board meeting that is expected to be ratifiedat the March 2019 shareholder meeting, OIL will allow offshoreGulf of Mexico assets to be excluded from the 2018 (andfuture) asset declarations. Note that OIL will continue to offerwindstorm coverage in “all other onshore and offshore areasof the Atlantic Basin and the world”. OIL management, as part of its overall marketing strategy, hasmade increased shareholder communications a major goaland is in the midst of a four year campaign to visit and meetwith all shareholders’ senior management. OIL had a higher than expected 2018 loss year with losses ofUS 917 million as at 30 November 2018 (as advised in OIL’sshareholder memo dated 13 December 2018) or slightlyless than one standard deviation (US 391 million) abovemean expected losses (US 565 million). This comprised ofUS 619 million from 2018 Occurrences and US 298 millionof adjustments from prior years. As a result, premiums haveincreased on average by 29% across Pools A&B, althoughthis will vary by member. This is because the 2013 loss yeardrops out of the calculation and 2013 had lower than average/expected losses of US 362 million, combined with the effectof the high 2018 losses. Theoretical withdrawal premium(TWP) has also been impacted. OIL paid a US 450 million dividend in June 2018 toshareholders of record as of January 1, 2018. OIL emphasizedthe Board of Directors dividend determination is based onOIL’s capital needs (i.e., “excess” capital, if any, will be utilizedto support increased limits, if the shareholder body requestssuch lower rates, or dividends etc.). Lastly, OIL has clarified, as a governance improvement, itsboard members can only be current shareholder employeesand should a directors’ employment status change duringtheir annual term of service then the director(s) is required tosubmit their resignation for the Board’s Executive Committeeconsideration. Shareholder membership remains at 54 with one newshareholder joining in December 2018 and two othershareholders merging. Also, several companies haveexpressed an interest in joining OIL. Standard & Poor (S&P) upgraded OIL’s rating from “A-” to“A”, a major positive development. The Moody’s A2 rating isunchanged and AM Best is not used for rating purposes (OILhas taken the view S&P and Moody’s ratings are sufficient forits global stakeholders).Marsh 3

BackgroundOIL is a mutual insurance company serving the wider “energy” industry (including power, mining and chemical operations).Membership of OIL is governed by the OIL Shareholders’ Agreement which is a binding contract between OIL and its members. TheShareholders’ Agreement contains the standard OIL insurance and reinsurance policies, byelaws, and the Rating & Premium Plan.The Rating & Premium Plan is the post-loss funding model utilized by OIL. It is designed to collect 100% of incurred losses (excluding“incurred but not reported” losses) from members over a five year period; per the “repayment schedule” below; therefore, OIL does nottake underwriting risk in the traditional sense.Cumulative Losses (%)Repayment 018Premium Payment Year2019202020212016Loss Year yr x pool % yr x 20%2017 Annual Premium 2012 Standard & Poor’s (S&P) rating (financial strength) (stable),Moody’s A2 (stable) as of May 2017.Some quick facts and figures: Established in 1972 with 16 shareholders. Estimated Unmodified Gross Assets (UGA) insured in theregion of US 3 trillion (September 1, 2018). OIL is currently not reliant upon reinsurance (fundamentalprinciple – to be an alternative to the commercial market). Shareholders’ equity in the region of US 3.8 billion(at September 1, 2018). OIL’s expense ratio is 3-5% which is low compared to thecommercial market, another factor why OIL’s rates over thelong term are extremely competitive. Total assets in the region of US 7.2 billion(at September 1, 2018). Over US 13 billion claims paid since inception (in 1972). 54 members (domiciled in USA, Canada, Europe, Australia,Asia, and Latin America/Caribbean as of December 31, 2018). Rating philosophy designed to fully fund past losses over time(past losses future premiums past losses). US 1.90 billion of dividends paid and premium credits paidbetween 2013 - 2018. However, this is directly related to thelow claims experience during this time period and is not to betypically expected of the OIL mutual model.26% E&P26% Integrated Oil17%MEMBERSHIPBY INDUSTRYSECTOR11% ChemicalMEMBERSHIPBY 2Other%4 The Oil Insurance Limited (OIL) Companion 2019R&M52%

EligibilityEligibility requirements are rigorously enforced and onlycompanies that are defined as an “Energy Company” areeligible for membership. In addition to traditional upstream anddownstream oil and gas exploration and production, refiningand marketing operations, the definition of “Energy Operations”extends to electric utilities/power generation, pipeline, chemical(including pharmaceutical),and mining operations.To be eligible for membership, at least 50% of “UGA” must bedevoted to, or 50% of annual gross revenues must derive from,“Energy Operations”.Additionally, certain criteria have to be met (and in many casesmaintained) to qualify for OIL membership: Minimum US 1 billion of UGA (Property, Plant and Equipment(PP&E) before depreciation, depletion, or amortization, plusbook value of inventories). Minimum credit rating of either BBB- (S&P) or Baa3 (Moody’s). Acceptable 10-year loss history (losses greater thanUS 5 million reported on a ground-up basis). Business operations that represent an appropriate spread of riskand fit within a mutual framework. All of the applicant’s energy operations must be covered by OILunless specifically agreed by OIL. Demonstrated track record of maintaining world-class health,environment, and safety standards.Note: Despite the minimum requirement for US 1 billion of UGA,in order to qualify for the full US 400 million OIL limit UGA willbe deemed at US 4 billion for premium purposes.Existing members whose credit ratings fall below establishedminimum criteria must post acceptable security (usually a LOCbut, per the above, a surety bond can also be utilized) and/orpay their premium annually (up front).All applications must be approved by OIL management. Newmembers are not permitted to amend their selected coverageprofile for three years other than with the specific agreement of OIL. Companies without external credit ratings can obtain a “shadowrating” or submit to financial analysis by OIL and may berequired to post acceptable security (for example, a letter ofcredit (LOC)).Marsh 5

CoveragesPrincipal risks insured include: Physical damage to property. Basis of recovery is ReplacementCost but if property is not repaired or replaced within twoyears from the date of loss the claim will be settled on aDepreciated Cost basis (Depreciated Cost ReplacementCost less a deduction for depreciation and technological,functional, and economic obsolescence). Terrorism (including cyber terrorism). Riots, strikes, or civil commotion. Well control restoration and redrilling costs. Pollution liability (legal, including punitive damages, orcontractual liability for third party property damage orpersonal/bodily injury). Note: Coverage is provided on a “sudden and accidental”basis (40 days discovery/120 days reporting) for Occurrencescommencing on or after January 1, 2006 or date of OIL entry,whichever is later. It should be noted that “gradual tail” (nonsudden and accidental) cover for prior Occurrences remainsavailable for members who elected broad form pollutioncoverage prior to January 1, 2006. All members of OILincluding those insured on a “sudden and accidental”basis (i.e. all post 2006 members) are still pooling losseswith the “gradual tail” members.RISK INSUREDALL-RISK PHYSICAL DAMAGETERRORISM(INC. CYBER ROL OF WELL(INC. RESTORATION & RE-DRILLING)3RD PARTY POLLUTION LIABILITY NON GRADUAL (40/120 DAYS)6 The Oil Insurance Limited (OIL) Companion 2019 Debris removal costs and clean-up expenses (includingreasonable and necessary expenses incurred to mitigatefurther injury or damage that would otherwise arise). Offshore Pollution Liability Agreement (OPOL) certification(where applicable). Sue and labor expenses (including general average andsalvage expenses). Cargo. Construction (contractors or project lenders cannot be namedas additional insured parties). Note: OIL eliminated Offshore Gulf of Mexico DNWS coveragefrom January 1, 2018. It should be noted that apart from Designated NamedWindstorm (DNWS) and non-owned property not included ina member’s UGA declaration and not used in the operations ofthe member, none of the coverages provided by OIL are sublimited and therefore the full limit of the OIL policy is availablefor all perils/coverages (including earthquake).MAJOR EXCLUSIONSWAR, NUCLEARBUSINESS INTERRUPTIONCOMMERCIAL WASTE DISPOSALPRODUCT & COMPLETEDOPERATIONS LIABILITYTANKER POLLUTION LIABILITY(EXCEPT CHARTERER’S LIABILITY)TRANSMISSION &DISTRIBUTION LINES*INHERENT DEFECT, WEAR & TEARECONOMIC & TRADE SANCTIONS

Principal exclusions are: War (excepting terrorism) and political risk (confiscation orexpropriation). Nuclear (applies to (i) the “Hot Zone” of any nuclear facilityor portion thereof or (ii) any loss, damage or expense arisingout of or resulting from nuclear reaction or nuclear radiationor radioactive contamination etc. Refer to OIL policy for fullexclusion but OIL does provide cover in the “Cold Zone”). Wear and tear (does not apply to collapse of the property, ora material part thereof, or resultant loss or damage to otherproperty). Loss of hole (direct physical loss or physical damage to insuredequipment in hole is covered). Transmission and distribution (T&D) lines above ground(1,000 meter exemption). Economic and trade sanctions. Oil in the ground, (prior to recovery). Land, land values (other than land alterations or processedwater). Loss of hire. Business interruption. Waste site pollution liability (commercial).Note: OIL is unable to provide cover for any operations whichmay breach sanctions (and sanctionable assets are to beidentified on the annual Unmodified Gross Asset declaration). The applicability of this exclusion will be determined “at thetime of loss” once all the facts and circumstances surroundinga claim are known. Watercraft. Products and completed operations liability. Tanker pollution liability (except charterers’ liability). Third party liability (other than pollution liability). Fidelity (dishonest or fraudulent acts but exclusion does notapply to physical damage caused by employee sabotage,vandalism or other willful and malicious destruction oftangible property). Defective part (relevant with respect to theconstruction coverage).Note: Floating production storage and offloading systems(FPSOs) are not excluded (not considered as “Watercraft”)but pollution liability for FPSOs is only provided if the FPSO is“secured at site” for the production, storage, or processing ofhydrocarbons at time of the Occurrence. No cover for off-stationpollution liability (routine maintenance or repair transits or fortransportation of cargo) other than for emergency breakaways/reasonable responses to emergencies (causing disconnect)which are the only circumstances in which off-station pollutionliability cover will be afforded for FPSOs.Automatic CoverageOIL’s coverage is either automatic or subject to additionalcriteria, depending upon the circumstances.Coverage subject to additionalcriteria:Automatic coverageA member’s interest in a joint venture or other non-consolidated(or partially consolidated) affiliate (if interest equates to greaterthan 1% of UGA), subject to a declaration of the assets to OIL forpremium purposes and written approval by OIL.Worldwide coverage for an energy company and its consolidatedsubsidiaries/affiliates (except where sanctions apply).A member’s interest in a joint venture or other non-consolidated(or partially consolidated) affiliate (if interest is less than 1% ofUGA).Coverage for non-owned assets where a member has acontractual obligation to repair/replace (or which are in the care,custody, or control of the member).Newly acquired properties are automatically included from dateof acquisition.Coverage may be extended to non-OIL member third partyinterests (for example, joint venture partners) subject to OILguidelines (which includes a requirement to enter into anindemnification agreement with OIL in respect of claims that maybe brought by such third party interests) and written approval byOIL. For the current guidelines please refer to the OIL website.Note: Coverage for a joint venture or other non-consolidated (orpartially consolidated) affiliate is only permitted if the interest tobe insured is not otherwise insured under another OIL policy.Marsh 7

Limits and DeductiblesFor all coverage provided by OIL, including (currently) all nonDNWS windstorm coverage, the limits and deductibles are asset out below. However, specific limit and deductible conditions(restrictions) apply to DNWS coverage and these are highlightedseparately.Note: Designated Named Windstorm (DNWS) currently equatesto a Named Windstorm originating in or migrating into theAtlantic Basin DNWS region only (Gulf of Mexico/Caribbean/ USGulf Coast and US East Coast onshore, etc.), formerly known asan “Atlantic Named Windstorm” or “ANWS”, but other regionscould potentially be included as DNWS regions (subject tocoverage and limit restrictions) if triggered by future windstormloss activity.Note: OIL eliminated Offshore Gulf of Mexico DNWS coveragefrom January 1, 2018.In this companion we focus on the onshore and rest of world(ROW) offshore windstorm coverage and limit restrictions.Oil Occurrence TriggerOIL coverage is triggered by an Occurrence.An Occurrence is essentially defined as an event or continued orrepeated exposure to conditions commencing during the policyperiod that is neither intended nor expected by the member andthat causes loss (or losses irrespective of the period or area overwhich such losses occur).For earthquake an event means one or more earthquake shocksoccurring within any period of 72 hours.For “perils of nature” including but not limited to windstorm, anevent equates to a single atmospheric disturbance designated bythe Responsible Meteorological Service.8 The Oil Insurance Limited (OIL) Companion 2019The definition of Occurrence in a commercial market policy maybe different from OIL. This can include different application of72-hour clauses and definitions of windstorm or other naturalphenomena. Such differences give rise to a potential disconnectwith respect to the treatment of limit and attachment point forany excess OIL or OIL difference in conditions/wraparound (“OILWrap”) policies that may be put in place to compliment OIL. Thisissue needs to be carefully managed.A separate definition applies for Designated Named Windstorm(DNWS) Occurrences. Currently a DNWS Occurrence equates toa Named Windstorm originating in or migrating into the AtlanticBasin DNWS region only (formerly known as an “Atlantic NamedWindstorm” or “ANWS”), and this is further discussed below.

Limits (current 2019)Individual members’ Annual aggregate limitOccurrence limitOIL does not impose an annual aggregate limit.US 400 million (for interest).HoweverHoweverA DNWS annual aggregate limit of up to US 300 million (twicethe DNWS Occurrence limit selected) applies for each member.Limits are also restricted to the lesser of 10% of a member’s UGAor US 400 million, although a member can purchase “excesslimits” up to the maximum US 400 million Occurrence limit orUS 150 million (part of US 250 million) DNWS Occurrence limitspecified above by declaring UGA deemed at US 4 billion.Note: OIL imposes a sublimit of US 50 million (for interest) fornon-owned property which is (i) not included in a member’s UGAdeclared to OIL and (ii) which is not used or intended for use inthe operations of the member.OIL 400MOIL 400MJoint venture limitLimits are not scaled to interest and recoveries are onlyrestricted by:1. Members’ individual Occurrence limit.2. Members’ DNWS annual aggregate limit.3. Aggregation Limit, as applicable (see following page).Note: This can be a major differentiator from a commercialmarket control of well or pollution coverage perspective.OIL 400MOIL 150MPart of 250M60 %RETAINED / MARKET /RETRO LIMITDNWS Occurrence limit is restricted to US 150 million (60%quota share part of US 250 million).%Marsh 9

Per occurrence aggregation limit US 1,200million (all insureds combined)HoweverDNWS Aggregation Limit is restricted to US 750 million.Aggregation Limit is shared between all members perOccurrence (for example, major earthquake or majorwindstorm). However, each member is still limited to theirindividual Occurrence limit or DNWS annual aggregate limitas applicable. The effect of this condition is potentially toreduce an individual member’s OIL recovery in any givenOccurrence, if that Occurrence affects more than threemembers (or more than five members for DNWS).‘P rim ary ’ E x am pleCommercial Market Excess (if required)OIL USD 400MOIL DeductibleFlexible limitLimits can apply as primary, excess, or quota share and may beventilated (split).Different limits are allowed on a sector-by-sector basis.‘External’ Quota Share Example(USD 800M)OIL USD400MCommercial MarketUSD 400MMembers can select a reduced limit (minimum US 100 million orUS 60 million quota share part of US 100 million for DNWS).OIL DeductibleIf less than full limits are purchased, OIL may, at its discretion,impose a warranty relating to the absence of any other insurance(i.e. prohibiting insurance purchases from other insurers inexcess of the reduced OIL limit). Currently OIL does not apply thewarranty to windstorm limit selection.Note: If the full US 400 million is not purchased, the warrantyrelating to the absence of relevant excess insurance will bewaived for limits between US 300 million and US 400 million, asnoted in the news update section. However, a warranty will stillapply to the first US 300 million if a member does not buy thatentire limit.Members can purchase ventilated (or split) limits subject toapproval by OIL. Splitting the limit into layers (using part ofthe limit on a high excess basis) allows members to avoid thewarranty regarding the absence of other insurance (for selectingless than US 300 million OIL limit). OIL will also allow the layersof a ventilated limit to be arranged with different coverageprofiles (100% limit versus external quota share limit, forexample).‘E x cess’ E x am pleOIL USD 400MCommercial Market PlacementRetention‘Internal’ Quota Share Example60% ofUSD 400M OIL40%Commercial MarketNote: Endorsement No. 5 (Schedule of Excess Insurance) willneed to be adjusted to reflect split limits.OIL DeductibleOIL allows either 10%, 20%, 30% or 40% Internal Quota Share.10 The Oil Insurance Limited (OIL) Companion 2019

Deductibles(current 2019)Minimum deductibleUS 10 million (100%) per Occurrence.If higher deductibles are selected, OIL may, at its discretion,impose a warranty relating to the absence of underlyinginsurance (i.e. prohibiting the purchase of underlying insurance).To date, OIL has never exercised that right.Deductible applicationDeductibles scale to interest subject to a minimum of US 1million (for interest) per Occurrence. Different deductibles canbe selected for different Sectors.A single Occurrence involving multiple Sectors attracts onlythe highest deductible (losses eroding the highest deductibleapplicable to any one Sector are also applied to erode or exhaustthe deductible amount applicable to any other Sectors involvedin the same Occurrence).HoweverHoweverDNWS minimum deductibles are subject to OIL agreement anddoes NOT scale to interest.The highest single deductible methodology only applies to thenine Sectors (not DNWS).New members may potentially be subject to a higher minimumdeductible than US 10 million depending upon their 10-year losshistory and their current exposu

4 The Oil Insurance Limited (OIL) Companion 2019. Eligibility Eligibility requirements are rigorously enforced and only companies that are defined as an “Energy Company” are eligible for membership . In addition to traditional upstream and do