Baltimore bridge collapse: Will the tragedy mark record loss for shipping insurance sector?
Upstox
2 min read • Updated: March 28, 2024, 5:30 PM
Summary
The cumulative loss could reach up to $4 billion, according to Marcos Alvarez, managing director for global insurance ratings at Morningstar DBRS. This would be higher as compared to the Costa Concordia luxury cruise liner disaster in 2012, which had cost insurers close to $2 billion.
The collapse of Francis Scott Key Bridge at the Port of Baltimore may amount to a record loss for the global shipping insurance sector, analysts said, pointing out that it is still unclear when operations would resume at the port which is one of the busiest in the United States.
The 2.57-km landmark bridge collapsed on Tuesday after Dali, a Singapore-flagged container, rammed into it. Six persons were presumed dead due to the collision. The government of Maryland, under whose jurisdiction the port falls, has launched an operation to clear the waterway.
With experts warning that it may “still take weeks” for the port to turn operational, insurers have begun assessing the likely losses incurred across several product lines including trade credit, cargo, marine transport, contingent business interruption and infrastructural loss, among others.
"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," news agency Reuters quoted Marcos Alvarez, managing director for global insurance ratings at Morningstar DBRS, as saying.
The estimated loss would be higher as compared to the Costa Concordia luxury cruise liner disaster in 2012, which had cost insurers close to $2 billion.
Also Read: Baltimore port bridge collapse: What impact it may have on shipping operations
According to Mathilde Jakobsen, senior director, analytics at insurance ratings agency AM Best, the claims linked to the Baltimore bridge collapse and the resultant disruption in shipping operations are likely to range in “billions of dollars”.
Alvarez added that one of the fallouts of the Baltimore tragedy is that marine insurance rates may go up.
Apart from the heavy cost to be borne by the shipping insurance sector, analysts have also pointed towards the economic loss to be caused by the closure of Baltimore port. The suspension of operations may result in a monthly loss of $28 million for the government of Maryland, economic software analysis company IMPLAN reportedly said, adding that the cost of rebuilding the Francis Scott Key Bridge is estimated at $600 million.