Francis Scott Key Bridge Collapse: A Potential Record-Breaking Insurance Event
The recent catastrophic event where Baltimore’s Francis Scott Key Bridge met its demise has sent ripples through the insurance industry. The chairperson of Lloyd’s of London, a leading commercial insurance market, has indicated that the fallout from the collapse could amount to a staggering multi-billion dollar insurance loss. This incident is poised to become one of the most significant in marine insurance history.
Details emerged about the Singapore-flagged container ship Dali, which experienced a loss of power and control while departing Baltimore Harbor. The vessel’s collision with a bridge support pylon led to a significant portion of the bridge plunging into the Patapsco River. This has not only blocked critical shipping lanes but also necessitated an indefinite shutdown of the Port of Baltimore, a major hub on the US Eastern Seaboard.
Financial services firm Morningstar DBRS has projected that insurance claims could soar as high as $4 billion. Bruce Carnegie-Brown of Lloyd’s remarked to Reuters that while it was premature to estimate the total insurance loss accurately, the magnitude of this event could surpass all previous marine insurance losses, including the infamous Costa Concordia disaster in 2012.
Lloyd’s, with over 50 member firms and significant involvement in marine and property insurance markets, is bracing for substantial claims due to both the physical damage to the bridge and the operational disruption at the port. The market reported gross written premiums exceeding 6 billion pounds in marine, aviation, and transport insurance and reinsurance last year, with North America being its largest market.
In addition to dealing with the bridge collapse, Lloyd’s has been managing reserves of 1.6 billion pounds set aside for disputed aviation claims related to aircraft stranded in Russia amid the Ukraine conflict. Carnegie-Brown disclosed that negotiations between aviation leasing companies and insurers are progressing well, with major court cases in Dublin and London expected later in the year.
The insurer’s robust financial health was highlighted as Lloyd’s reported a pre-tax profit of 10.7 billion pounds earlier in the day, bolstered by strong underwriting and investment performance.