Francis Scott Key Bridge Collapse: A Potential Record Insurance Loss
The recent collapse of the Francis Scott Key Bridge in Baltimore is poised to become a significant event in the insurance industry. According to the chairperson of Lloyd’s of London, a prominent commercial insurance market, this incident is expected to result in a staggering multi-billion dollar insurance loss.
The incident occurred when the Singapore-flagged container ship Dali experienced a loss of power and subsequent inability to steer, leading to a collision with the bridge’s support pylon. This catastrophic event caused a significant portion of the bridge to fall into the Patapsco River, effectively blocking shipping lanes and necessitating the closure of the Port of Baltimore, a critical hub for the US Eastern Seaboard.
Financial analysts at Morningstar DBRS have projected that insurance claims could reach as high as $4 billion. Bruce Carnegie-Brown of Lloyd’s told Reuters that while it is premature to estimate the total loss, he anticipates it will be one of the most substantial in marine insurance history. The loss could potentially surpass that of the Costa Concordia disaster in 2012, which currently holds the record.
Lloyd’s, with over 50 member firms and significant involvement in marine and property insurance markets, is bracing for considerable claims due to both the physical damage to the bridge and the operational disruptions at the port. The insurance market reported gross written premiums exceeding 6 billion pounds in marine, aviation, and transport insurance and reinsurance for 2022, with North America being its largest market.
Additionally, Carnegie-Brown highlighted that Lloyd’s has allocated 1.6 billion pounds in reserves for disputed aviation claims related to aircraft stranded in Russia after its invasion of Ukraine. Settlement discussions between aviation leasing companies and insurers are reportedly progressing well, with major court cases in Dublin and London anticipated later in the year.
Despite these challenges, Lloyd’s reported a robust pre-tax profit of 10.7 billion pounds for 2023, bolstered by strong underwriting and investment returns. The resilience of the insurance market will be tested as it navigates through the ramifications of the Baltimore bridge collapse and other global events impacting its portfolio.