Reinsurance costs could rise after Baltimore bridge collapse – S&P | Insurance business America
The event is considered one of the most expensive in maritime history
reinsurance
By Kenneth Araullo
While the International Group of P&I Clubs’ (IG) comprehensive reinsurance protection is expected to mitigate much of the financial impact of the recent Baltimore Bridge collapse, S&P is warning of higher reinsurance costs that could arise following the event.
The recent bridge accident in Baltimore, in which a cargo ship collided with the bridge, resulting in fatalities and significant property damage, is believed to be one of the largest ship losses in history, possibly surpassing the Costa Concordia disaster in 2012.
The incident highlighted the critical role of reinsurance in addressing catastrophic losses in the shipping sector.
Specific details about the incident remain uncertain, but expected losses are expected to include costs of rebuilding the bridge, as well as damage to the ship and its cargo, as well as disruption to operations.
The US president has pledged immediate federal funding to rebuild the bridge, which could speed up the process but brings uncertainty about the size of the final insurance claims.
Reinsurance coverage for the Baltimore Bridge collapse
The ship involved in the accident is called Dali and is insured by Grace Ocean. It is registered in Singapore and is a member of the Britannia P&I Club. Britannia’s liability insurance for the Dali is capped at $10 million, with the IG jointly responsible for the next $90 million under a pooling agreement.
AXA XL leads IG’s $3 billion reinsurance program, which is supported by a consortium of major international reinsurers. Despite the magnitude of the incident, the marine insurance sector, backed by solid reinsurance contracts, is well equipped to deal with the claims.
AXA XL in particular is expected to manage its share of costs effectively while maintaining its financial ratings and position in the market, it said.
Overall, while the event is considered significant, it is seen as manageable for the reinsurance sector thanks to strong underwriting performance in recent years and continued favorable pricing trends that are expected to continue into 2024.
S&P also noted that the industry’s diversified coverage strategies and extensive reinsurance protection will play a critical role in maintaining its resilience to such maritime disasters.
It’s worth noting that fellow ratings agency Fitch previously predicted minimal impact of the collapse on individual reinsurers’ earnings.
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2024-04-12 13:20:00
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