New broker-led facilities are adding capacity to the energy insurance market while other operations that would offer billions of dollars in high-layer limits are gauging buyer demand before offering their coverage.

But some question the level of buyer interest in participating in the high-layer facilities backed by Munich Reinsurance Co. and Torus Insurance Holdings Ltd.

Willis Group Holdings P.L.C. said last week that it will provide up to $250 million in coverage backed by Berkshire Hathaway International Insurance Ltd. for oil and gas companies. The broker said buyer demand for additional capacity, sparked in part by rising oil prices, prompted establishment of the facility.

The Willis offering follows a similar arrangement that Marsh Inc. made with Berkshire Hathaway in January 2010. This year, Marsh is putting in place the same arrangement with several unnamed Lloyd's of London underwriters.

Both brokers' facilities will place 10% of a single insured's risk, up to $250 million for that portion of the risk. The coverage attaches at levels agreed to in policy terms.

The facilities provide property damage, business interruption, operators extra expense and third-party liability for oil and gas upstream and construction risks. Property damage and business interruption is written for downstream operations.

Jim Pierce, global chairman of Marsh Inc.'s energy practice in Houston, said Marsh is pleased with the way its facility performed last year and is “actively working on year two of its implementation.”

“We are in the process of engaging some Lloyd's underwriters to provide coverage on a basis that virtually mirrors the Berkshire Hathaway facility,” Mr. Pierce said.

In a statement, Willis said its facility was established in response to buyer demand for access to additional capital. A Willis spokeswoman said rising oil prices are contributing to demand for more sources of coverage.

Mr. Pierce said it normally takes up to 12 months for oil prices to rise sufficiently to affect asset values and coverage prices.

Meanwhile, two previously announced facilities to provide high limits to energy risks after the Deepwater Horizon oil rig accident in the Gulf of Mexico still are sorting out the level of demand for their products before writing any coverage.

Munich Re is moving forward with its facility, called SOSCover, that aims to provide as much as $10 billion in excess casualty limits written by a consortium of reinsurers and insurers to cover sudden oil spill pollution on deepwater drilling risks in the United States.

The facility is being developed with brokers Guy Carpenter & Co. L.L.C., a unit of Marsh & McLennan Cos. Inc.; Willis Re, the reinsurance broker unit of Willis Group; and Aon Benfield Inc., a unit of Aon Corp.

Separately, Guy Carpenter and Aon Benfield are developing a facility called excEED, for Excess Energy Exploration and Development, that is backed by Torus. The plan is to offer $1 billion in excess casualty and pollution capacity in tranches of $250 million through an insurer and reinsurer consortium.

The facilities are not intended to compete with each other and are being developed so their coverage attaches at different excess levels, said Edward A. Sweeney Jr., executive vp at Guy Carpenter in New York.

When Munich Re announced its plans for the facility in September, the reinsurer said its launch would hinge partly on whether U.S. lawmakers increase the $75 million cap set by the Oil Pollution Act. While that hasn't happened, Munich Re and the brokers are proceeding with plans to launch SOSCover.

The Deepwater Horizon disaster proved that there is a need for the facility, regardless of the cap, Mr. Sweeney said.

“If we have learned anything from the Deepwater Horizon, it is that these events can take on a magnitude not contemplated in the past,” Mr. Sweeney said.

BP P.L.C., which is largely self-insured, has taken responsibility for claims from the rig disaster and established a facility to pay those claims. As of last week, it had paid or approved claims amounting to $4.47 billion.

“It's more of an education process,” Mr. Sweeney said of efforts to get the word out to potential buyers about the products and services the facilities plan to offer. “It's now down to generating insured interest,” he said.

That could be difficult, some experts say.

“I don't think we've seen enough demand to know how they will price (coverage) or if it will fly in the marketplace,” said Mark Coleman, London-based director in Standard & Poor's Corp.'s insurance practice.

Demand also is uncertain because of a muddled U.S. regulatory picture, sources said.

Since the Deepwater Horizon, “people are waiting to see the implications from a regulatory perspective and how liability would change,” Mr. Coleman said. “There is a lot of uncertainty around that;” and until it is removed, there will be questions as to what sort of coverage energy companies will need in the Gulf, he said.

A brokerage executive who is not involved in developing the Munich Re or Torus operations said there is a danger that buyer interest is waning with the delay in launching them. “You need to strike while the iron is hot. I think some of the emotions have died down” since the Deepwater Horizon accident, said the executive, who asked not to be named.

There is a danger that Munich Re's facility, if it does provide high-limit coverage, could influence U.S. lawmakers to raise the pollution liability cap if they feel energy companies have access to sufficient insurance.

“The idea of an insurance product which appears to be conceived to enable legislators to enact legislation with higher limits of financial responsibility is a slippery slope,” the broker said. “Insurance products that drive regulation may be ill-conceived.”