If aggregate limits of insurance coverage are reached in the first bad storm of 2006, there will be no coverage left for a second storm. "It's in Mother Nature's hands," James R. Pierce, responsible for global marine and energy insurance for insurance giant Marsh, told Houston Energy Finance Group members recently. Upstream companies are seeing premiums and deductibles soar, while coverage is reduced. A few majors and very large independents operating in the Gulf of Mexico have decided to abandon the traditional insurance companies and self-insure instead. And E&P start-ups are not in an enviable position. "They will have to sell themselves to the insurers just as they would to investors on a road show," Pierce said. "It's a seller's market out there as there simply aren't that many companies offering insurance to the upstream, and they have finite capital. Luckily, E&P companies have strong balance sheets right now." For more on this, see the August issue of Oil and Gas Investor. For a subscription, call 713-260-6441.