Monday, March 29, 2021

Reinsurance: Ever Given Incident Likely To Cause Large Loss Event For Industry—Fitch

From Artemis

Ever Given blocking of Suez canal adds further pressure for reinsurers: Fitch

....Fitch Ratings has warned that, “The blocking of the Suez Canal and resulting disruption to global shipping is likely to cause a large loss event for the reinsurance industry.”

Adding, “This event will reduce global reinsurers’ earnings but should not materially affect their credit proles, while prices for marine reinsurance will rise further as a consequence of the container ship ‘Ever Given’ grounding in the canal.”

While the end of the blockage appears imminent, Fitch still believes that enough damage has been done to result in a meaningful marine market loss event.

“The ultimate losses will depend on how long it takes the salvage company to free the container ship completely and when normal ship traffic can resume, but Fitch estimates losses may easily run into hundreds of millions of euros,” the rating agency explained.

Incidents that damage or sink large container ships can easily result in US $1 billion or more of property losses, but there are largely related to salvage Fitch said.

As it’s now hoped the Ever Given will be able to continue forwards and clear the canal, claims related to the hull and cargo insurance, including salvage, should remain well below the billion dollar mark, Fitch explained....