MSA Indemnity Risk: A Key Driver of Insurance Rates and What You Can Do About It

Master Service Agreements (MSAs) are the “life-blood” for any Oil & Gas Service Contractor. Without the right MSAs, Contractors are without approved-vendor status and miss out on the opportunity to work with top tier Oil & Gas Companies. Therefore, Contractors seek to maximize the quantity of signed, quality MSAs. But what are the risks associated with this quest?

Simply stated, Oil & Gas Companies lower their own insurance premiums and self-insured exposures by systematically pushing risk to Contractors. The primary vehicle for this risk transfer is the indemnity section of an MSA. While a strongly worded MSA accomplishes the risk-reduction goals of the Oil & Gas Company, it is often done so at the expense of the Contractor. Carefully read of the indemnity sections of just one or two of your MSAs and you’ll quickly understand why your insurance premiums are so high.

Fortunately for the Contractor, there are alternatives, and MSAs are negotiable (if you have the right partnerships). Contractor clients of Ross & Yerger receive no-cost MSA review and negotiation services. Our firm has successfully negotiated hundreds of Oil & Gas Company MSAs on behalf of Contractor clients - leading to significant savings in the form of reduced insurance premiums and enhanced overall corporate value.

At Ross & Yerger, we examine each of our clients’ MSAs from 14 different perspectives. These 14 points are the primary drivers of risk and cost for Contractors, so successful negotiation of these points leads to insurance cost and risk reduction.

Does your insurance agent manage the indemnity risk of your MSAs in an effort to reduce your insurance costs and minimize your balance sheet (self-insured) exposure? If not, you’re paying too much for your insurance.

Contact Jacob Haralson (jharalson@rossandyerger.com, 601-944-0961) or Greg Maloney (gmaloney@rossandyerger.com, 601-944-0838) at Ross & Yerger today for a no-obligation assessment of your overall insurance and risk management program.

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