Baltimore disaster may be the largest-ever marine insurance payout, Lloyd’s boss says

The
collapse
of
a
major
Baltimore
bridge
and
its
knock-on
effects
could
result
in
the
biggest-ever
marine
insurance
payout,
the
chair
of
insurance
giant
Lloyd’s
of
London
said
on
Thursday.

Analysts
have
forecast
that
insured
losses
from
the
disaster
would
amount
to
a
figure
in
the
single-digit
billions,
after
a
huge
cargo
ship
crashed
into
the
Francis
Scott
Key
Bridge
on
Tuesday.

Six
people
were
presumed
dead.

“We’re
beginning
to
deploy
resources
in
anticipation
of
this
being
a
very
substantial
claim
for
the
industry.
And
for
the
Lloyd’s
market,
it’s
going
to
take
some
time
for
for
the
complexity
of
the
situation
to
unravel,”
Bruce
Carnegie-Brown
told
CNBC’s
“Squawk
Box
Europe.”

“So,
[it’s]
very
early
days
to
call
a
number.
I
don’t
at
this
point
anticipate
that
it’s
outside
our
realistic
disaster
scenario
planning.
It
feels
like
a
a
very
substantial
loss,
potentially
the
largest-ever
marine
insured
loss,
but
not
outside
parameters
that
we
plan
for.”

Carnegie-Brown
added
that,
while
there
would
clearly
be
claims
for
the
ship,
cargo
and
the
bridge,
it
is
“second-order
impacts”
that
would
become
“substantial.”

“A
lot
of
business
is
going
to
be
interrupted,
supply
chains
are
going
to
be
interrupted
by
ships
that
are
both
trapped
inside
the
port
and
of
course,
ships
that
were
trying
to
gain
access
to
the
port
that
no
longer
can,
and
those
second
order
effects
will
take
some
time
to
work
through,”
he
said.

Baltimore
is
the
11th
biggest
port
in
the
U.S.
and
the
country’s
busiest
for
the
import
and
export
of
autos
and
light
trucks.
Supply
chain
operators
are

scrambling
to
minimize
the
impact
on
trade.

Morningstar
DBRS
analysts
said
in
a
Wednesday
note
that
insured
losses
could
total
between
$2
billion
and
$4
billion,
depending
on
the

length
of
time
that
the

port
is
blocked.
Such
a
figure
would
surpass
the
current
highest
amount,
which
was
paid
out
from
the
capsizing
of
the
Costa
Concordia
cruise
ship
in
2012.

Various
insurance
policies
are
likely
to
be
triggered
across
marine
liability
and
hull,
property,
cargo
and
business
interruption.

“Despite
the
hefty
insured
losses,
we
expect
they
will
remain
manageable
for
the
insurance
industry
as
they
will
involve
a
large
and
diversified
pool
of
well
capitalized
insurers
and
reinsurers,”
Morningstar
said.

Barclays
puts
the
potential
insurance
claims
between
$1
billion
and
$3
billion.

The

Singapore-flagged
container
vessel
was
chartered
by
Danish
shipping
giant


Maersk
and
was
carrying
its
customers’
cargo,
but
it
was
operated
by
charter
vessel
company
Synergy
Group.
Early
reports

suggest
the
ship
lost
power
before
hitting
the
bridge.

Investigations
will
be
carried
out
by
authorities
in
both
Singapore
and
the
U.S.
to
establish
legal
liability,
as
part
of
a
complex
process
that
could
take
months
or
years.

Maersk
will
have
had
liability
cover
as
the
charterer,
rather
than
as
the
operator
of
the
vessel,
David
Osler,
shipping
and
commodities
principal
analyst
at
Lloyd’s
List
Intelligence,
told
CNBC
earlier
this
week.

Several

global
autos
firms
have
said
they
are
assessing
the
impact
of
the
tragedy
on
their
operations
and
expect
to
have
to
reroute
trade,
therefore
extending
some
delivery
times.
Many
say
they
do
not
expect
major
disruption
at
present.

Barclays
analysts
said
in
a
Wednesday
note
that
German
autos
manufacturers
BMW,
Mercedes
and
Volkswagen
are
most
exposed,
as
European
imports
accounted
for
40%
to
50%
of
U.S.
sales
in
recent
years.

BMW
told
CNBC
that
the
incident
would
not
impact
material
supplies
for
its
U.S.
plant,
and
that
the
company
was
in
contact
with
its
logistics
partner
regarding
imports.
Volkswagen
said
its
port
operations
were
located
on
the
seaboard
side
of
the
bridge
and
would
not
be
impacted,
but
noted
that
it
may
face
trucking
delays.
Mercedes
noted
that
other
entry
ports,
such
as
Brunswick,
Georgia,
would
help
ease
import
pressures.

“While
there
will
be
near
term
disruptions
in
auto
imports
and
exports,
I’m
confident
that
Customs
and
Border
Protection,
regional
ports,
and
terminal
operators
will
work
closely
with
the
auto
industry
to
identify
optimal
shipping
alternatives
until
the
Port
of
Baltimore
resumes
vessel
operations,”
Mitch
Merriam,
vice
president
of
borders
and
maritime
security
at
K2
Security
Screening,
told
CNBC
by
email.

“The
Port
of
Baltimore
is
going
to
suffer
in
the
short
term,
but
plans
are
already
underway
to
divert
and
accommodate
the
additional
traffic
at
other
east
coast
ports,
including
Philadelphia,
Norfolk,
Savannah
and
Charleston.
All
of
them
can
handle
cars
and
light
trucks.”

The
port
handles
a
wide
range
of
goods
including
sugar
and
gypsum
and
is
used
by
retailers
such
as

Home
Depot,
Ikea
and Amazon.

—
CNBC’s
Ganesh
Rao
and

Lori
Ann
LaRocco

contributed
to
this
story.