BP Oil Spill Claims Reach $1.6 Billion

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This morning, BP announced that the Gulf of Mexico oil spill has cost the company $1.6 billion. The London-based company said that included in the $1.6 billion figure were payments of $62 million that have been paid out to 51,000 claims. The figure also includes “the cost of the spill response, containment, relief well drilling, grants to Gulf states” and federal costs.

With several years (or decades, even) of cleanup ahead, the $1.6 billion is seen as a merely an initial cost figure. Credit Suisse actually estimated the total bill at $37 billion.

President Obama, who has been criticized for what has been perceived as a lack of urgency towards the situation, has announced that the government wants BP to set up an independently managed escrow account to compensate those with damage claims.

A majority of the Senate called on BP to set up a $20-billion account, administered by an independent trustee, to pay for cleanup and economic damages from the massive gulf oil spill, “ensuring that there will be no delay in payments or attempt to evade responsibility for damages.”

The letter was signed by 54 senators, almost the entire Democratic caucus. “The damages caused by your company are far reaching,” the lawmakers wrote to BP’s Tony Hayward.

Obama is scheduled to address the nation Tuesday evening in regards to ongoing oil leak.

Though the current situation in the Gulf of Mexico may seem like the worst oil spill in history, it has, so far, been a far cry from the Ixtoc oil spill. The Ixtoc 1, like the Deepwater Horizon, was an exploratory rig that suffered a blowout in the Bay of Campeche (Gulf of Mexico) in 1979. Fast Company created an interesting infographic that compares the world’s worst oil spills. Here is a section from the rather large graphic:

bp oil spill

When you look at the Deepwater Horizon oil spill this way, it doesn’t look as bad as you thought, right? Well take a look at the environmental impact of this current spill, compared to the impact of previous, and some larger, spills:

Picture 6

Experts say that this event could become the largest oil spill in the world in terms of amount of oil leaked, money required for cleanup and claims and damage to the environment. If BP doesn’t find a solution soon, there is little doubt the Deepwater Horizon oil spill might make the number one spot — an unfortunate accolade.

Aon and Man U: United

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As the entire planet gears up for the World Cup kick-off today, insurance broker Aon will be watching the matches unfold from an entirely new vantage point. On June 1, the company began a partnership with the world’s most iconic soccer team, Manchester United, and Aon’s corporate logo will now grace the team’s  jerseys for the next four years. Since the World Cup is a competition between countries, not club teams, Man U will not actually be participating, but many of its players, including superstar Wayne Rooney, are playing. So for a company that just became the highest-profile soccer sponsor on the globe, there is of course a new-found excitement for world-class soccer, no matter the venue.

I recently exchanged some emails with David Prosperi, Aon’s vice president of global public relations, to chat about how the sponsorship came about and how he thinks it will affect Aon’s image in the world. He also gives us his World Cup picks.

Jared: Recently valued at $1.87 billion by Forbes, Manchester United is the most valuable sports franchise in the world (much to the delight of this Red Sox fan/Yankee hater). Getting the Aon name on their jerseys is obviously huge exposure. How did this opportunity come about?

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David Prosperi: The opportunity came about in 2009 when Manchester United was searching for a new global partner and shirt sponsor. Greg Case, Aon’s president and CEO, received a framed Manchester United team shirt with an invitation to be considered as the new sponsor. The team invited just a few global firms to tender for its key sponsorship. We thoroughly researched the opportunity, did our due diligence on the team, and we are very pleased that Aon was selected because we feel it is the perfect way to communicate the value we bring to people and businesses.

Jared: What was Aon’s main motivation for aligning with the soccer powerhouse?

Prosperi: We wanted a global platform that would unite our firm, help us generate new business and maximize the efficiency of our global marketing investment. Manchester United has a truly global reach, and they share our values of leadership, teamwork and a passion for excellence. Manchester United is an organization with a proven return on investment in a sponsorship relationship, and it creates the ability to directly support sales and revenue-generating efforts for our firm on a global basis — particularly in emerging markets such as China, Korea, Singapore and Brazil where the club has extremely strong brand awareness. With the #1 brand in the world’s #1 sport, Manchester United’s 333 million fans equal the total population of the U.S., Canada and Australia, and they sell more team shirts than the 32 teams in the National Football League combined.

Jared: Besides just the corporate marketing benefits, I know there is a large charity side to all of this. What types of initiatives will we see in the months and years ahead from this Aon/Man U partnership?

Prosperi: We hope everyone will see some ongoing charitable initiatives that unite our global colleagues and generate some impact in the communities in which Aon does business. On June 1, we kicked off our partnership with Manchester United by doing a charity event in Old Trafford (the team’s stadium) with a Penalty Kick Challenge that generated over ,000 (about for every global Aon colleague) to The Christie, a U.K. cancer treatment facility in Manchester that our office in Manchester has supported in the past. Around the world, Aon colleagues participated in “Aon United REDy Day” to raise money for their local charities by wearing Manchester United shirts or red clothes for the day. And on July 15, we will have “Aon United Day,” which will have our colleagues in over 120 countries participating in fundraising and volunteer activities in concert with the unveiling of the new Manchester United shirt with the Aon logo.

Jared: How does it feel to know that kids around the world – even some without TVs in developing world villages – will now see their heroes like Wayne Rooney wearing your company’s name on their chest?

Prosperi: We feel very fortunate and honored to be only the fourth shirt sponsor for Manchester United. Football is dynamic and competitive. It appeals to a global audience. It transcends cultures and people, and it brings communities together like no other sport. For example, in Asia you will see that in many countries in the region fans have taken Manchester United to their hearts in as passionate a way as the club’s domestic fans.

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That passion is what really attracted us to this opportunity. It also speaks to the power of the Manchester United brand. Most football fans, whether they support Manchester United or not, would agree that the club has helped spread interest in the sport around the world, particularly the English Premier League, which in turn has benefited all teams in terms of more lucrative television rights and sponsorship deals.

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Jared: OK. Last question … two-parter. Who are you rooting for in the World Cup? And who do you think will win?

Prosperi: Personally, I am hoping that the U.S. team performs well. I think that Brazil is the favorite to win, with England being the sentimental favorite.

BP Mismanages a Coffee Spill and the Best of @BPGlobalPR

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Not surprisingly, the whole world pretty much hates BP now. And more and more people are lashing out against the oil conglomerate with attacks. Some are vicious advocacy campaigns that include pocket-hurting measures like boycotts. Others are vicious satirical jabs at a company whose reputation is being destroyed, piece by piece, day by day.

Here is the funniest attack I’ve seen. From the Upright Citizens Brigade, it’s a spoof of how BP would try to handle a boardroom coffee spill. (There is one instance of NSFW language at the end.)

Good stuff.

And coming in at a close second is the fake BP public relations Twitter feed. If you’re not familiar, many companies use the social media site Twitter to inform the public of their latest news and offerings. And someone has created a satirical @BPGlobalPR account that sends out frequent humorous updates laced with acerbic cynicism for how BP is handling this mess. Often accompanied by the sarcastic “#bpcares” disclaimer, the account advocates charity causes such as offering “free bpcares” t-shirts that you can purchase for $25. (You can read more about @BPGlobalPR here and here.)

Here are the cleverest updates from the account so far:

SPOILER ALERT: The leak stops eventually, everyone forgets about it and we all buy another vacation home. #cantwait

Found driftwood that looks like Jesus crying oil. Not sure what it means but we’re charging 20 bucks to see it. #bpcares

If we’re being accused of being criminals, we want to be tried by a jury of our peers — wealthy execs who don’t give a damn. #fairisfair

I’ve gotta say, at night the gulf really doesn’t look that bad. #bpcares

OMG This isss ridciulsus. playing a drinking gamee where we drink a shot everytme we seeee an oily birdddd!!! LOL! so wasted!!11 #pbcares

What a gorgeous day! The ocean is filled with the most beautiful rainbows! #yourewelcome #bpcares

They want to fine us $4,300 for every barrel of oil spilled? Umm, we’re not spilling barrels, the oil is going directly into the gulf. DUH

A bird just stole my sandwich! You deserve everything you get, nature!!! #bpcares

If Top Kill doesn’t work, we’re just gonna toss a giant “Get Well Soon” card into the gulf and hope for the best. #bpcares

Just wrapped up a meeting with the EPA. Terry kept farting out loud at all the right moments. Not sure how he does it, but it’s SO FUNNY!

Funny, no one has thanked us for seasons 3-15 of Treme yet. #bpcares

The good news: Mermaids are real. The bad news: They are now extinct. #bpcares

Catastrophe is a strong word, let’s all agree to call it a whoopsie daisy.

Beverly Hillbillies marathon on TBS – now THESE guys knew what to do with an oil leak!

Not only are we dropping a top hat on the oil spill, we’re going to throw in a cane and monocle as well. Keeping it classy.

The “Unintended Consequences” of the Neal Bill

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In the video below, Swiss Re has done a marvelous job using new media to help advocate its position against “The Neal Bill” (HR 3424) that is aiming to impose a new tax on foreign reinsurers — something most of the stakeholders in the insurance industry are against.

The Risk and Insurance Management Society (RIMS), a nonprofit organization that represents risk managers (and publishes this blog … and pays my salary), is also firmly opposed due to the fact that any tax on the reinsurance industry will only be passed on first to the insurance industry and then to insurance buyers. Taxing reinsurers will also threaten capacity and make coverage harder to find at any price.

National Underwriter wrote a good, informative piece explaining such:

Speaking for RIMS, Scott Clark, risk and benefits officer for the Miami-Dade County School Board and a RIMS board liaison, said, “The group has always opposed proposals to restrict market access to insurance capacity.”

Mr. Scott called the legislation “a great threat to insurance capacity in the United States.”

“Over the past decade it has been proposed several times, not surprisingly, by a handful of U.S. insurers which seek to gain via a protected market that would allow them to charge higher prices,” Mr. Clark said.

Honestly, the changes proposed by this bill represent yet another example of how poorly Washington understands insurance. Advocates of the bill probably think they’re helping out insurance buyers by giving U.S. insurers an advantage. They’re not. No one — not reinsures, not insurers, not brokers, not commercial buyers, not personal line buyers — will benefit here.

And Swiss Re sums that all up perfectly in 140 seconds. (For more on the issue, you can check out www.KeepInsuranceCompetitive.com)