Risk Acceptance Criteria for Crude Oil/ Gas Refineries Along with Pricing Insurance Product

Risks in the energy sector are usually very low in frequency but very high in intensity, which has made the energy sector of any country a high-risk sector. Therefore, to cover its risks, appropriate insurance policies must be designed and implemented. The design of such insurance policies requires accurate identification of all risks, determination of their acceptance criteria, and finally doing actuarial calculation for the designed product. This article just focuses on insurance for crude oil and gas refineries in operation. First, based on the literature review, the risks in this field are identified and then, based on the opinions of health and safety experts and risk assessors working in the field of energy, the model for assessing such risks develops in the form of a risk assessment matrix. A Bayesian structural equation modeling using the Amos has been employed to study impact of the presented variables. Then, referring to the information available in the insurance industry, the pricing of this insurance product is presented based on the rate and the sum insured.