Baltimore Bridge Collapse Considered The Largest Ever Marine Insured Loss To Date

Insurance payouts for the unforeseen and unfortunate collapse of the Francis Scott Key Bridge in Baltimore could be the greatest ever in marine insurance, per Lloyd’s of London CEO John Neal.

This is one of history’s most significant marine losses, Neal declared during an interview with Bloomberg News on Thursday. He added that it is a multi-billion-dollar loss. He also thinks it has to be, but it is too early to tell how much it will cost.

The Francis Scott Key Bridge collapsed on Tuesday after it was struck by a Singapore-flagged container vessel, the Dali. On Wednesday, Barclays Plc specialists estimated that insurers encounter claims as high as $3 billion.

Barclays mentioned in its note that insurance claims for damages to the bridge could hit $1.2 billion. It further predicted potential liabilities to range between $350 million and $700 million for wrongful deaths and yet-to-be-assessed amounts for business interruptions. At the same time, access to the port remains blocked.

Discerning who will pay the claims will be determined whether the accident was induced by negligence or owing to mechanical failure, reports Bloomberg Intelligence analysts Kevin Ryan and Charles Graham in a note on the day of the incident.

The claims settlement is likely to be complicated by multiple parties’ involvement. There is quite an intricate web of insurers involved with this, explained Neal in the interview on Thursday. He stated that the firm assumes such a loss will arise each year and that the expectations for financial reflections are “manageable.”

Video Credits: NBC News/YouTube

In another Bloomberg radio interview, he added that although Lloyd’s of London insurers is involved in the cover, the risk spans multiple firms.

He said there are many different insurers involved. There is the financial muscle to deal with the issues being discussed. Neal noted that supply chain issues can get complicated when calculating losses.

Lloyd’s reported underwriting profit of £5.9 billion ($7.4 billion) for 2023 on Thursday, a £3.3 billion increase on the previous year due to lower costs from significant risks and natural catastrophe claims.

Besides thousands of employees at the port, Maryland’s Governor Wes Moore cautioned during an earlier interview that more than 140,000 individuals could be impacted indirectly by the disruptions.

Carnegie-Brown informed CNBC that there would be claims for the vessel, the bridge, and the cargo, but the second-order impacts would be substantial.

He stated that many businesses would be interrupted, noting that vessels currently trapped within the port and those trying to gain access would disrupt the supply chains. He added that the second-order effects will likely take some time to resolve.

On Wednesday, a White House statement stated that an American governmental supply chain disruptions task force met to discuss the probable impacts on national and regional supply chains following the bridge’s collapse.

Since the collapse of the Francis Scott Key Bridge, the White House and federal agencies have extensively engaged with industry, ports, ocean carriers, and labour unions to reduce disruptions as shipments are rerouted. At the same time, the Port of Baltimore is closed to vessel traffic, the White House summarized.

Reference: Economic Times, Insurance Journal

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Source: Maritime Shipping News