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BP's Risk-Management Firm is Really Good at Screwing Over Oil Spill Claimants

By Kirsten Korosec

Updated on: June 11, 2010 / 7:31 PM EDT / MoneyWatch

ESIS, the risk-management firm hired by BP to handle claims from fishermen, shrimpers and small businesses affected by the Gulf oil spill, is really, really good at its job. Which, if you read the company's recovery services fact sheet, is all about "reducing our client's loss dollar pay-outs."

When you cut through the jargon that means: paying out as little as possible. That little boast on ESIS' website has raised the ire of Advocates for Environmental Human Rights. The New Orleans non-profit public interest firm has now sent a letter to Coast Guard Adm. Thad Allen, commander overseeing the spill response, urging the government to take a closer look at ESIS and the claims process, according to a Times-Picayune report. The obvious implication is that BP, which has had a relationship with ESIS for 15 years, is trying to keep its payments as low as possible.

It's a case of conflicting priorities, and the guy that loses is the one trying to collect the check. ESIS' job is to help its client, BP, and that job is to limit the loss to the company. No major corporation like BP is going to hire a risk-management company that boasts, "We pay out a lot, your profits be damned!" The process is naturally stacked against the claimant, even if the moral compass of the company and its risk-management firm point directly north. Which, of course, is far from certain in this case.

The new revelation comes on top of longstanding complaints that BP's claims process has been slow and disorganized. Some critics have suggested the feds take over the claims process. That would solve the obvious problem of BP controlling the payouts, something I'm sure lots of folks would welcome.

So far, the feds haven't proven they can do a much better, or faster, job. The government's lackluster and molasses-like reaction, including President Obama's failure to meet with BP CEO Tony Hayward, has been the primary complaint since the Deepwater Horizon rig exploded April 20.

Whether Obama is sufficiently mad enough is not a concern. In fact, it's a ridiculous criticism. Who cares if someone appears to be mad? All that means is we want a better actor. What's far more important, and where the government has failed in some cases, is being proactive -- not reactive -- to the response. BP's shoddy claims process is a perfect example. It took many local complaints and media reports before Allen sent a stern letter this week to Hayward demanding "detailed information on how claims are being evaluated, how payment amounts are being calculated and how quickly claims are being processed."

Allen may not have realized it, but he hit on exactly what the government needs to be doing. What we need is to demand transparency from BP and real oversight. Not shaking a fist from afar. Actual people on site looking out for Gulf spill victims. There's some positive signs that the feds are starting to catch on. Tracy Wareing, who leads the integrated services team for the national incident command, will be working directly with BP's senior claims executive to ensure the company speeds up the claims process. As Orwellian as it sounds, BP has proven we can't trust its numbers.

Photo from Flickr user Stuart Pilbrow, CC 2.0 Related: