23 April 2025
2025 Lillehammer Energy Claims Conference WELCAR - The policy that reshaped offshore construction insurance
Ian Curtin, Executive Partner of Upstream EPR at Gallagher, recently participated in the Lillehammer Energy Claims Conference documentary on WELCAR, sharing valuable insights on the policy's evolution and its impact on the offshore construction insurance landscape.
The insurance landscape before WELCAR
Before WELCAR's introduction in 2001, offshore construction insurance was seen as inconsistent, with manuscript policies created by brokers. These client-friendly but unstructured approaches often resulted in significant claims and underwriting losses, causing insurers to withdraw from the market and reducing available capacity.
WELCAR offered a much-needed solution as a unified, all-risk insurance policy for offshore construction projects that standardised coverage across the industry. This streamlined approach effectively rescued the offshore construction market by providing consistent terms and conditions, minimising disputes and simplifying insurance placements.
The success of WELCAR
The policy's development brought together key stakeholders including underwriters, brokers, insured parties, adjusters and various service providers. WELCAR's enduring success stems from its reliability and consistency, making it significantly more appealing than previous fragmented solutions.
In his interview, Ian reflected on WELCAR's success, noting that despite initially opposing it, he came to recognise its tremendous value, sharing that clients appreciated WELCAR for its consistency, ease of use and predictable pricing. He pointed out that alternatives, such as Munich Re's slightly revised version of older wordings, typically came with higher costs and increased deductibles.
He also added that the oil industry favoured WELCAR over more customised or older wordings because it made managing insurance much simpler.
Why did WELCAR II fail?
The documentary also explored attempts to introduce revisions, such as WELCAR II, which ultimately failed to gain market traction. Ian noted that WELCAR II failed because it completely rewrote the original wording rather than just updating it, resulting in errors and inconsistencies.
This approach would have required clients to fundamentally change how they managed contracts, which in turn proved impractical. Ian explained this using a familiar technology comparison - clients favoured consistency and simplicity over improved coverage, much like how VHS became more popular than Betamax, not because it was technically superior, but because it was the format used by the Japanese electronics companies who dominated the global market at that time. In the same way, WELCAR became the market standard because it was backed by the overwhelming majority of the influential players within the London oil and gas insurance market.
The future of WELCAR
As the offshore construction sector evolves, WELCAR must adapt to new technologies and environmental concerns, particularly with the rise of renewable energy projects. Industry professionals are calling for modernised wording to address emerging risks, whilst maintaining the policy's core strengths.
Despite these challenges, Ian remains confident about WELCAR's future, sharing that it is here to stay and has firmly established itself as the industry standard, despite its imperfections.
For many professionals in the sector, WELCAR represents more than just a policy – it has provided career stability, financial success and professional fulfilment, cementing its position as a foundation of offshore construction insurance.
2025 Lillehammer Energy Claims Conference, view full documentary here.
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