This updates our June 1, 2010 posting.

The still-growing Deepwater Horizon oil spill in the Gulf of Mexico could combine with a hurricane to cause devastation along the Gulf Coast and trigger trouble for insurers, Moody’s warned.

With millions of gallons of oil per day spewing into the Gulf of Mexico since April 22, 2010 – and several attempts to stop the flow having failed — the Deepwater Horizon disaster cost increases by the day with Moody’s estimating the current total insured loss between $1.4 billion and $3.5 billion.

Moody’s also reports that had BP purchased liability insurance in the commercial market instead of self-insuring its risks for property and liability cover through its captive insurer, Jupiter Insurance Ltd., the insurance and reinsurance industry’s exposure to the loss would have been even higher than current $1.4 billion to $3.5 billion estimates.

Stay tuned for regular updates.