“If you look at it from a marine point of view, this could be one of the largest marine losses in history. Insurance companies will be liable to cover the multi-billion-dollar losses. The vessel is insured, the bridge is insured, the port authority’s insured, so this is an insured loss”Lloyd’s of London Chief Executive Officer John Neal
London:
Insurance payouts for Tuesday’s collapse of the Francis Scott Key Bridge in Baltimore could be among the largest ever in marine insurance, according to Lloyd’s of London Chief Executive Officer John Neal.
“This has the potential to be one of the largest marine losses in history,” Neal said in an interview with Bloomberg News on Thursday. “It’s a multi-billion dollar loss. I think it has to be but I think it is a little too early to say what you actually think it’s going to cost.”
He noted that “the vessel is insured, the bridge is insured, the port authority’s insured, so this is an insured loss.”
The bridge collapsed Tuesday after being struck by a container ship, the Singapore-flagged Dali, sending vehicles into the water and threatening chaos at one of the most important ports on the US East Coast. Barclays Plc analysts estimated that insurers face claims of as much as $3 billion in a note on Wednesday.
Insurance claims for damage to the bridge alone could reach $1.2 billion, Barclays said in its note, predicting further potential liabilities of $350 million to $700 million for wrongful deaths and yet-to-be-determined amounts for business interruptions while access to the city’s port is blocked.
“Determining who pays those claims will rest on whether the accident was caused by negligence or mechanical failure,” Bloomberg Intelligence analysts Charles Graham and Kevin Ryan wrote in a note on the day of the collapse. “Given the multiple parties involved, settlement of any claims is likely to be complex.”
“There’s quite a complex weave of insurers that are involved with this,” Neal said in the interview Thursday, adding that the firm assumes every year that this type of loss will occur, and that expectations for financial considerations are “manageable”.
He added in a separate Bloomberg radio interview that although Lloyd’s of London insurers is involved in the cover, the risk is spread across multiple firms.
“There are many many different insurers involved throughout,” he said. “There is the financial muscle to deal with the issues that we’re talking about.” Neal said, adding that supply chain issues can get complicated when calculating losses.
Neal, however, said that Lloyds has sufficient “financial power” to cover the costs of the disaster that saw Singapore registered container ship MV Dali crash into the 1.6 mile long bridge that crosses the Patapsco River between Dundalk and Baltimore.
“From our point of view, we assume that these sort of losses will occur every year,” Neal said. “We model for them, we scenario build against them. So this is within the levels of expectations that we would think could happen for this type of loss.”
The insurance market chief, however, noted that while it is relatively straightforward to estimate the costs of the “obvious damage” to the ship and bridge, costs stemming from supply chain disruption are harder to predict in the immediate term.