Oil Insurance Ltd., after considerable losses from the 2005 hurricane season and this year's decrease in membership, is forging ahead with strategic changes and growth plans based on the mutual's view that it is a necessary alternative to the commercial market.

George Hutchings, OIL's chief operating officer, said one of the most significant changes is fixing a "pricing anomaly" for potential high-frequency and high-severity windstorm risks.

"We are making sure that we fairly and equitably are sharing the cost of risk in our membership. That makes us more attractive to members," Mr. Hutchings said.

Shareholders at the Hamilton, Bermuda-based mutual's annual meeting in March approved rating plan amendments that, for the first time, put Atlantic Named Windstorm risks in separate pricing categories from those without ANWS exposures.

The mutual also covers non-ANWS onshore and offshore exposures that include refining, exploration and production as well as chemical, mining, utility and other energy-related risks.

The board of directors also increased the mutual's aggregation limit for all risks to $750 million from $500 million last year. That higher limit effective June 1 will allow OIL "to maintain a solid capital base even if 2005 were to repeat itself," without the need for premium "calls," Mr. Hutchings said.

"OIL is very optimistic that the changes that we made or that we are going to make will be positive for the majority of members," he said.

Despite the changes, 12 shareholders, nine of which were utilities, announced they would not renew their OIL membership.

"The changes were not consistent with (utility companies') overall business objectives," Mr. Hutchings said. "We would have been more concerned if the members that left represented a cross-section of the membership."

Nine other shareholders did not renew their coverage last year. One other company became ineligible for membership this year after a merger.

To increase its 60-plus member companies, OIL "is looking to maintain and attract highly diversified energy operations all around the world," Mr. Hutchings said. The Far East and the Middle East are two potential growth areas, he said, "but it will be company-specific rather than region-specific."

OIL plays a valuable role in the insurance market for energy companies, Mr. Hutchings said. The mutual provides limits that would be impossible to obtain from a single commercial market provider. Windstorm-exposed policyholders can't find sufficient coverage even with OIL's capacity, he said.

Considering insurance industry cycles, "I do think there's a need for OIL," said John L. Ward, chief executive officer of Cincinnatus Partners L.L.P., an insurance advisory firm in Cincinnati. The mutual has served high-profile shareholder members "and has a strong brand name," and should ask for members "loyalty and commitment" as it builds financial strength after 2005's losses, he said.

Meanwhile, sister mutual Oil Casualty Insurance Ltd. soon will roll out its first formal marketing plan.

"Over the next 12 to 18 months, we want to make ourselves more known in the broker community," said Jerry Rivers, COO of OCIL, the excess liability arm of the Oil Group of Cos.

More than 50% of OIL's members also belong to OCIL, Mr. Rivers said. However, Mr. Hutchings noted, many companies that left OIL remain members of OCIL. Utilities heavily represented in the OIL departures remain one of OCIL's strengths.

OCIL's BBB+ rating from Standard & Poor's Corp. is a hindrance, Mr. Rivers said, "but from the standpoint of the marketing campaign, that will not slow us down."

OCIL is analyzing its book of business to guide its marketing efforts. "We want to be account-specific and have a conversation with potential clients," Mr. Rivers said. Additionally, the casualty arm of the Oil Group of Cos. has brought down its minimum limit for membership to $25 million to make it easier for potential members to include OCIL in their programs.

OCIL also will consider four or five new lines of business, Mr. Rivers said.

"At the end of the day, what has made these companies so successful is that we are a very efficient provider of sufficient capacity," Mr. Rivers said. "We have a low operating expense ratio" and shareholders receive earnings per share, he said.

"While we're independent from a financial point of view, members appreciate being part of both organizations," Mr. Hutchings said, with participants able to benefit from the members' collective risk management strength.