Economic Feasibility of the Profitability of Insurances Related to Oil and Gas Wells

Mehdi Sadeghi Shahedani, Mohammad Mahdi Askari and Amir Maleki Nejad

MPRA Paper from University Library of Munich, Germany

Abstract: Insurance is among the most important tools that have been devised to prepare readiness for dealing with threats. These valuable man-made tools with their capabilities have controlled many undesirable effects of unforeseen events. In each country, growth and development of insurance industry is considered as an indicator for evaluating the level of development. From the perspective of insurers, the risks of energy, especially the oil and gas industry, are known as high risks. Economic feasibility of the profitability of insurance related to oil and gas wells is the aim of this study that was performed through damage coefficient indicators and profit margin with scenario planning using engineering economics method. The results of this research indicate that the damage coefficient of this field of insurance is much lower than the whole insurance industry and have a suitable and very high profit margin. Therefore, due to the low damage coefficient and high profit margin and the stability of these types of insurance, their profitability is confirmed economically and investment and providing insurance coverage is adequately justifiable for these types of risk.

Keywords: economic feasibility; profit margin; insurance; oil and gas wells. (search for similar items in EconPapers)
JEL-codes: G22 P48 (search for similar items in EconPapers)
Date: 2017-08-15, Revised 2017-09-09
New Economics Papers: this item is included in nep-ene and nep-ias
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Citations:

Forthcoming in World Journal of Environmental Biosciences Supplementary.6(2017): pp. 6-14

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