, Singapore

IG's reinsurance to buffer Baltimore bridge loss

The Singapore-based vessel, Dali, is insured by Grace Ocean.

Most losses of the Baltimore bridge accident are reinsured, and the International Group of P&I Clubs' (IG) comprehensive reinsurance protection is expected to mitigate the impact. However, reinsurance costs for the IG may rise post-event, warns S&P Global Ratings.

The tragic collision between a cargo ship and a bridge has resulted in presumed fatalities and potentially the largest marine losses ever recorded, exceeding the Costa Concordia disaster in 2012. 

Whilst concrete loss predictions are premature, expected losses include property rebuild costs for the bridge, vessel and cargo damage, and business interruption.

The U.S. president's pledge to fund the bridge's reconstruction immediately, bypassing private sector coverage, may expedite rebuilding but heighten uncertainty over final insurance claims.

The vessel involved, the Dali, insured by Grace Ocean, is a member of the Britannia P&I Club and is Singapore-based. 

ALSO READ: Record-breaking Nat Cat causes $108b insured losses in 2023, says Swiss Re

Britannia's liability cover extends to $10m, with the IG collectively liable for the next $90m through pooling. 

AXA XL leads the IG's $3b reinsurance program, with coverage provided by large international reinsurers.

Whilst the collapse poses a significant marine loss, reinsurers are expected to manage it well due to diversified industry coverage. 

AXA XL, for instance, is well-positioned to absorb its share of costs without ratings impact, given its robust financial position.

Despite being one of the largest marine losses, the event is viewed as manageable for the reinsurance sector, supported by strong underwriting performance in recent years and favourable pricing trends expected to continue in 2024.

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