Total insurance claims from the blockage of the Suez Canal are expected to run into hundreds of millions of dollars as the industry pays out for hefty salvage costs and third-party losses.
Marine experts said the freeing of the 220,000-tonne Ever Given, which was prised off the side of the canal on Monday, would help put a cap on the total bill.
But they highlighted the cost of salvage and revenue lost by the canal authorities, as well as other knock-on effects for the hundreds of ships delayed by the incident.
“Total losses in the end will be lower than in other scenarios,” said Fitch analyst Robert Mazzuoli, following news that the Ever Given had been freed.
However, he stood by the rating agency’s estimate, published on Monday, that losses “may easily run into hundreds of millions of euros”, representing a “large loss” event for the global reinsurance industry.
Losses from the nearly week-long blockage are likely to put pressure on first-half earnings from reinsurers that are already suffering from US winter storms, Australian floods and coronavirus-related losses, Fitch added.
Christopher Dunn, head of the marine practice at law firm Kennedys, said “claims in excess of about $250m would not be unlikely”.
He pointed in particular to the sizeable bill expected from the salvors, as well as the dredging and excavation costs.
David Smith, head of hull and marine liabilities at insurance broker McGill and Partners, said his current best-case estimate for the total insurance claims from the incident had reached $150m, and was unaffected by the refloating of the vessel.
“The largest factor by far remains the possible loss of revenue claim from canal authorities,” he said, which he estimates was running at $15m per day.
Salvage costs will typically flow to the hull and machinery insurer, according to insurance experts.
Shoei Kisen Kaisha, the Japanese owner of the Ever Given, told the FT last week that this cover was provided by Tokyo-based MS&AD Insurance Group. MS&AD declined to comment.
Other claims could flow to the ship’s protection and indemnity insurance, provided by the UK P&I Club, a mutual insurer owned by shipowners.
“We congratulate the teams from the Suez Canal Authority and SMIT Salvage who co-ordinated the successful salvage operations,” UK P&I said on Monday.
UK P&I reiterated its earlier statement that it provided cover to the Ever Given “for certain third-party liabilities that might arise from an incident such as this — including, for example, damage caused to infrastructure or claims for obstruction”.
It said it was “unable to comment on any confidential insurance or potential claim details, all valid claims will be considered by the vessel owner, the UK Club and its legal advisers in due course”.
The club is part of a group of 13 such mutuals, the International Group of P&I Clubs, that share their large exposures.
Under this arrangement, UK P&I would pay the first $10m of any claim. Further losses up to the $100m level are shared with the pool. Beyond that, the group has $3bn worth of reinsurance cover.
IGP&I’s chief executive Nick Shaw last week said it was “far too early to say whether this matter will have any impact” on the pooling and reinsurance arrangements.
Other marine experts thought the final bill could end up below $100m. “I see this as a big economic loss, but not as catastrophic an insurance loss as it could’ve been,” said Marcus Baker, global head of marine and cargo at Marsh, another insurance broker.
Additional reporting by Kana Inagaki