London-based Fitch Ratings expects Suez Canal related claims to surpass $100 million
Although the Suez Canal’s week-long disruption is resolved, affected parties are calculating their damages. Fitch Ratings said this event would impact global insurers’ earnings without affecting profile. However, marine insurance is set to spike as a byproduct of this disaster.
Adding up the damages
Fitch said estimated losses from the saga might easily run into hundreds of millions of euros. Accidents involving large container ships though typically result in property claims over US$1 billion, are mostly related to salvage. In Ever Given’s case, Fitch notes the claims might still be below this amount if allowed to resume travelling.
Owners of cargo onboard Ever Given and other stranded vessels are expected to file their claims against the shipowner’s protection and indemnity (P&I) club, especially for losses related to perishable goods and supply chain disruptions. The Suez Canal authority might follow suit for their revenue losses. Though the media reported more than 300 ships stuck at either end of the canal, there were no words about environmental pollution.
Projected P&I outlook
Notwithstanding that a global panel of reinsurers will reinsure a large share of these losses, it will impact the latter’s 1H21 earnings, which were prior wounded by the pandemic, US’ winter storms and Australia’s flooding. Last year, global reinsurers reported declined earnings from pandemic-related claims. However, underlying performance improved due to significant price increases in non-life primary and reinsurance, and their capital positions remained robust in end-2020.
The sequence of catastrophes in 2021 will put additional strain on commercial insurance and reinsurance markets, pushing prices even higher in an already hardening sector. Fitch concluded the canal incident does not change the opinion that communicable disease exclusions in renewed treaties and a hardening market should lead to better results in 2021.