To identify the territory of regulation and tax of an energy risk consider:
1. The nature of the cover provided;
2. The physical location of the property; and
3. The location of the insured’s business establishment(s).

Offshore property
Offshore liability
Onshore property
Onshore liability
Production vessels hull and liability

Offshore property

Offshore property insurance provides cover for losses arising from physical damage to structures located offshore and may include business interruption.

  • Fixed property

    The risk location for immovable property, i.e. oil rigs fixed to the sea bed, oil wells and pipelines, is the territory in which the property is situated (territorial waters). If the policy insures offshore property at more than one location, and those locations are in more than one territory’s waters, there will be multiple risk locations.

    Please note: In some territories, e.g. Canada and the US, the location of the insured’s residence or business establishment creates a risk location irrespective of the physical location of the insured property. Consequently, if the insured property is in a different territory from the insured’s residence or business establishment, there are two territories for regulation and tax.  
  • Moveable property

    In most territories, the risk location is where the moveable property is normally situated.

    The main exception to this rule is in the EEA where the regulatory risk location for moveable property is the territory where the insured is resident but the tax risk location remains the location of the moveable property. 

    If the contract covers moveable property situated in more than one territory there may be multiple risk locations.

    Where the moveable property’s location is uncertain or variable, the risk location is the territory in which the insured’s residence or business establishment is located.

    Please note: In some territories, e.g. Canada and the US, the location of the insured’s residence or business establishment creates a risk location irrespective of the physical location of the insured property. Consequently, if the insured property is in a different territory from the insured’s residence or business establishment, there are two territories for regulation and tax.  


Offshore liability

Offshore liability insurance covers the liabilities of operators of offshore structures or contractors working on them, including liabilities arising from pollution incidents. The offshore structure may constitute a business establishment for the purposes of risk location. 

The risk location is the territory in which the insured’s business establishment is located.

If more than one business establishment is covered, then each may individually create a risk location.

Onshore property

Onshore property insurance covers losses arising from physical damage to onshore structures and property and may include business interruption.

  • Fixed property

    The risk location for immovable property, i.e. oil refineries, wind turbines, processing plants and pipelines, is the territory in which the property is situated. If the onshore property is situated in more than one territory there will be multiple risk locations.

    Please note: In some territories, e.g. Canada and the US, the location of the insured’s residence or business establishment creates a risk location irrespective of the physical location of the insured property. Consequently, if the insured property is in a different territory from the insured’s residence or business establishment, there are two territories for regulation and tax.  
  • Moveable property

    In most territories, the risk location is where the moveable property is normally situated.

    The main exception to this rule is in the EEA where the regulatory risk location for moveable property is the territory where the insured is resident but the tax risk location remains the location of the moveable property. 

    If the contract covers moveable property situated in more than one territory there may be multiple risk locations.

    Where the moveable property’s location is uncertain or variable, the risk location is the territory in which the insured’s residence or business establishment is located.

    Please note: In some territories, e.g. Canada and the US, the location of the insured’s residence or business establishment creates a risk location irrespective of the physical location of the insured property. Consequently, if the insured property is in a different territory from the insured’s residence or business establishment, there are two territories for regulation and tax.  

Onshore liability

Onshore liability insurance covers the liabilities of operators of onshore structures and property or contractors working on them. The onshore structure may constitute a business establishment for the purposes of risk location. 

The risk location is the territory in which the insured’s business establishment is located.

If more than one business establishment is covered, then each may individually create a risk location.

Production vessels hull and liability

Production vessels’ hull and liability insurance covers damage to a production vessel’s hull and the liability of its operator.

The risk location is determined in the same manner as ship’s hull and liability contracts


Definition of 'business establishment'

European Union (EU) legislation defines the term ‘establishment’. Outside the EU the term is not so well defined, so in the absence of any contradictory guidance, it is appropriate to follow the EU approach.

Examples of business establishments:

  • subsidiary companies 
  • branches of companies 
  • representative offices 
  • offices managed by businesses’ own staff 
  • tied selling agents 
  • factories and workshops 
  • mines and quarries 
  • oil and gas wells 
  • drilling platforms fixed to sea bed

 

Translations

Français

 

Deutsch

 

Italiano

 

中文

 

Português

 

España

Risk locator tool

Risk Locator | Establish the location of your risk

Frequently asked questions 

Introduction to Risk Location

What is risk location and why is it important ?

Introduction to risk location

Establishing the risk location

To help establish risk location please consider the questions provided via the link below

How to establish the risk location

Class of business guidance

To help you establish the risk location please consider the class of business

Class of business guidance 

Risk Location Examples

The interaction of different territorial rules can make a given scenario complex. Applying the principles set out will assist market participants in establishing the risk location.

Risk location examples

Get more from Crystal

Register  for a free Crystal/Risk Locator account and benefit from:

  • Access to premium content
  • Risk location guidance
  • Regular updates on regulatory and fiscal requirements via Lloyd's Regulatory Communications newsletter
  • Access to Crystal Assist, an online tutorial that provides an introduction to Lloyd's licences and regulatory and fiscal requirements (CII CPD Accredited Event - 20pts)
  • Ability to save your favourite searches

Login/Register

  • For guidance on how to use Crystal access the Crystal Demo

 

Contacts

Lloyd's International Trading Advice
(LITA)

Lloyd's Desk,
Ground Floor,
Underwriting Room

t: +44 (0)20 7327 6677
e: LITA@lloyds.com