Insurers could face losses of up to $4 bln after Baltimore bridge tragedy-analyst (updated)

Chubb

27/03/2024 18:07

* 
      Claims could total up to $4 bln, record for shipping
disaster
    

        * 
      Insurance lines affected include property, marine,
liability
    

        * 
      International Group of P&I marine insurers have
reinsurance
cover of $3.1 bln
    

        * 
      AXA lead reinsurer on first layer of IG reinsurance
cover-Insurance Information Institute
    

  
 (Recasts, adds new comments paragraphs 4, 13, AXA, Aon, Chubb
in paragraphs 12, 14)
    By Sinead Cruise, Jonathan Saul and Carolyn Cohn
       LONDON, March 27 (Reuters) - Baltimore's Francis Scott
Key Bridge collapse could cost insurers billions of dollars in
claims, analysts say, with one putting it at as much as $4
billion, which would make the tragedy a record shipping
insurance loss.
    Six people are still missing after a collision with a
Singapore-flagged container ship destroyed the landmark bridge
on Tuesday, forcing the closure of one of the busiest U.S.
ports.
    With little clarity on when the Port of Baltimore would
re-open, insurers and analysts are now assessing the likely
losses borne by underwriters across several product lines
including property, cargo, marine, liability, trade credit and
contingent business interruption.
    "Depending on the length of the blockage and the nature of
the business interruption coverage for the Port of Baltimore,
insured losses could total between $2 billion and $4 billion,"
said Marcos Alvarez, managing director for global insurance
ratings at Morningstar DBRS. That would surpass the record
insured losses of the Costa Concordia luxury cruise liner
disaster in 2012, he said. 
    Mathilde Jakobsen, senior director, analytics at insurance
ratings agency AM Best, also said the claims would likely run
into "billions of dollars".
    Ship liability insurance, which covers marine environmental
damage and injury, is provided through protection and indemnity
insurers known as P&I Clubs.
    The International Group of P&I Clubs collectively insures
approximately 90% of the world's ocean-going tonnage and member
P&I clubs mutually reinsure each other by sharing claims above
$10 million. The IG Group declined to comment.
    According to AM Best, the group holds general excess of loss
reinsurance cover up to the value of $3.1 billion.
    
    SPREADING THE COST
    Moody's Ratings analyst Brandan Holmes said approximately 80
different reinsurers provided that cover to the ship's insurers.
    "While the total claim is expected to be high, it is
unlikely to be significant for individual reinsurers since it
will be spread across so many," he said.
    Insurer Britannia P&I said in a statement that vessel, named
the Dali, was entered with the club, adding that it was working
closely with the ship manager and relevant authorities "to
establish the facts and to help ensure that this situation is
dealt with quickly and professionally".
    Loretta Worters, spokesperson at the Insurance Information
Institute, said AXA XL  AXAF.PA  was the lead reinsurer on the
first layer of cover for IG's reinsurance programme, with other
global reinsurers also involved. AXA XL did not immediately
respond to request for comment. 
    Alvarez said the disaster would likely put upward pressure
on marine insurance rates globally.
    Worters added she believed Aon  AON.N  was the insurance
broker for the property policy for the bridge. Insurance Insider
reported that Chubb  CB.BN  was the lead underwriter for the
policy. Aon and Chubb declined to comment.  
    Initial estimates of the cost of rebuilding the bridge,
which is likely to be paid by the federal government, are at
$600 million, economic software analysis company IMPLAN said.
    The closure of the port for just one month could see a total
loss of $28 million for the state of Maryland, according to
IMPLAN analysis. 
    "The economic disruption and pain felt by businesses and
individuals in Maryland and the Baltimore economic area will be
widespread and likely take years to fully comprehend and
compensate those affected," said Julien Horn, partner, Ports &
Terminals and Logistics, at insurance broker McGill and
Partners.
    

 (Reporting By Sinead Cruise, Jonathan Saul, Carolyn Cohn and
Noor Zainab Hussain; Editing by Andrea Ricci and Tomasz
Janowski)
 ((sinead.cruise@thomsonreuters.com; 020 7513 5026; Reuters
Messaging: sinead.cruise.thomsonreuters.com@reuters.net))