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The blockage for nearly a week of the container ship, the Ever Given, will weigh on reinsurers’ earnings, says rating agency Fitch.

Hundreds of ships were delayed by the 220,000 ton Ever Given, which got stuck in the Suez Canal just less than a hundred miles north of the canal’s southern opening.  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-ton Ever Given, which was grounded in the east bank by its bow and the west bank by its stern, thankfully puts a cap on the total bill.

But the cost of salvage and revenue lost by the canal authorities, as well as other effects for the hundreds of ships delayed by the incident, easily run into hundreds of millions of dollars, 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.

“I see this as a big economic loss, but not as catastrophic an insurance loss as it could’ve been,” Marcus Baker, global head of marine and cargo at Marsh Christopher Dunn, head of the marine practice at law firm Kennedys, said.  “Claims in excess of about $250 million would not be unlikely,” he added. 

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 $150 million, and was unaffected by the refloating of the vessel. 

The largest factor by far remains the possible loss of revenue claim from canal authorities.  It was estimated it was running at 15 million dollars per day. 

Salvage costs will typically flow to the hull and machinery insurer, according to insurance experts.

Other claims could flow to the ship’s protection and indemnity insurance.

Other marine experts thought the final bill could end up below $100 million. 

Lonce Lamonte, journalist, lonce@adjustercom.com