Re/insurers face $4bn hit from Baltimore bridge disaster, topping Costa Concordia claims
Following the collapse of the Francis Scott Key Bridge in Baltimore, insured losses are anticipated to reach up to $4 billion, surpassing the record payouts seen after one of Europe’s worst maritime disasters in 2012 off the coast of Italy.
Morningstar DBRS estimates that losses from Tuesday’s (March 26) incident, which brought down Baltimore’s largest bridge and caused several casualties, would still exceed the $1.5 billion insured losses of the Costa Concordia event, even at the lower end of the range.
“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,” Morningstar said in its latest update of the disaster.
The collapse is expected to trigger various policies, including marine liability and hull, property, cargo, and business interruption coverage.
Despite the significant insured losses, analysts at Morningstar believe they will “remain manageable” for the insurance industry, given the large and diversified pool of well capitalised insurers and reinsurers.
Marcos Alvarez, managing director at Morningstar, noted that the losses would compound existing challenges faced by marine insurers.
“In our view, these losses will add to the woes of marine insurers who have been facing recent challenges due to the Houthi rebels’ attacks in the Red Sea,” he said.
“We also anticipate that the losses linked to the collapse of the Baltimore bridge will add upward pressure to the pricing of marine insurance coverages globally,” Alvarez added.
Morningstar’s estimates exceed those of ratings agencies Moody’s and AM Best, who predict that most claims will fall to global reinsurers. Around 80 different (re)insurers provide approximately $3 billion in cover to the ship’s insurers, Britannia P&I Club and the International Group (IG) of P&I Clubs, according to Moody’s.
AM Best said that reinsurers, led by AXA XL, will primarily bear the insurance claims arising from the accident. Moody’s emphasised that while the total claim is expected to be high, it is unlikely to significantly impact individual (re)insurers due to the spread across numerous entities.
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