Top reinsurance intermediary BMS this week launched a new product to help cover its OIL Insurance policyholders against windstorms.

The new Windbreaker product offers cover for any potential shortfall due to damage caused by a named windstorm exceeding OIL's aggregate limit of $750 million.

Unprecedented losses from Hurricanes Katrina and Rita resulted in two significant changes to OIL policyholders' coverage.

Prior to the devastation wreaked by the hurricanes in 2005, the commercial energy market made concessions to provide drop-down coverage for OIL members, covering a shortfall limit.

But following the hurricanes, the market no longer provides this drop-down coverage and OIL has lowered its aggregate limit accordingly.

"Market changes have created a measurable gap in coverage for OIL members, resulting from losses exceeding the aggregate limit," said executive vice-president of BMS Intermediaries Inc., Michael Cahill.

"The BMS Windbreaker product will provide OIL policyholders with seamless coverage to bridge that gap."

Mr. Cahill explained that BMS introduced the new policy to make up for the shortfall.

"OIL accounted that for Katrina and Rita, their losses were $2 to $2.5 billion and they had an aggregate limit of $1m, so they had to basically pro-rate that limit back to their membership," he said.

"Our policy is just basically stepping up and picking up that difference in the limit. It is really following the OIL policy and there are a number of OIL members interested in it.

"It is an issue for OIL's membership, but it is not something sponsored by OIL."

And he said the feedback from the OIL membership has been good so far. He believes he has the right qualities to ensure the successful implementation of the product.

"I think what makes us a little bit different is that I have 20 plus years of experience of working with major companies, including OIL companies, so I think I have a bit of an understanding of the issues and challenges that face the industry."

The policy will be underwritten and issued by an A-rated or better company.

It will provide a $50m aggregate limit for the 2007 wind season, with additional limits available, and is available to all OIL members.