Francis Scott Key Bridge Collapse to Trigger Massive Insurance Claims
The recent catastrophic event where the Francis Scott Key Bridge in Baltimore met its demise is poised to have significant financial repercussions. The chairperson of Lloyd’s of London, a leading commercial insurance market, has indicated that the incident could result in insurance claims reaching into the billions.
Details emerging from the incident reveal that the Singapore-flagged container ship Dali, which was departing Baltimore Harbor for Sri Lanka, suffered a critical loss of power and steering control. This mechanical failure led to the vessel colliding with a bridge support pylon, causing a substantial section of the bridge to collapse into the Patapsco River. The resulting debris has obstructed vital shipping lanes and necessitated the indefinite shutdown of the Port of Baltimore, a critical hub for trade on the US Eastern Seaboard.
Financial analysts at Morningstar DBRS have projected that insurance claims could soar as high as $4 billion. Bruce Carnegie-Brown of Lloyd’s conveyed to Reuters that while it is premature to estimate the total insurance loss accurately, he anticipates a multi-billion dollar figure. He highlighted the potential for this event to surpass the Costa Concordia disaster as the most substantial single marine insurance loss on record.
Lloyd’s, with over 50 member firms and a strong presence in marine and property insurance sectors, is bracing for substantial claims due to the bridge damage and port disruptions. In 2022, Lloyd’s reported gross written premiums exceeding 6 billion pounds in marine, aviation, and transport insurance and reinsurance, with North America being its largest market.
In addition to dealing with the fallout from the bridge collapse, Carnegie-Brown mentioned that Lloyd’s has allocated 1.6 billion pounds in reserves for contested aviation claims related to aircraft stranded in Russia after its invasion of Ukraine. He noted that negotiations between aviation leasing companies and insurers are progressing well, with major court cases in Dublin and London anticipated later in the year.
Despite these looming challenges, Lloyd’s reported a robust pre-tax profit of 10.7 billion pounds earlier in the day, buoyed by strong underwriting and investment returns.