According to Fitch Ratings, the global reinsurance industry is likely to face a loss of hundreds of millions of euros due to the blocking of the Suez Canal, says an article published in Reuters.
Losses for the reinsurance industry
Even as rescue teams were successful in refloating the world’s largest container ship, the blocking of the Suez Canal is likely to result in losses worth hundreds of millions of euros for the reinsurance industry.
What happened?
The 400-metre (430-yard) long Ever Given got wedged diagonally across the canal in high winds, blocking the path for hundreds of vessels waiting to transit the shortest shipping route between Europe and Asia.
For more information read our article Mega Boxship Blocks Suez Canal Traffic
Global reinsurers’ earnings
The credit rating agency said that this event will reduce global reinsurers’ earnings but should not materially affect their credit profiles, while prices for marine reinsurance will rise further.
Nearly doubled rates
Shipping rates for oil product tankers nearly doubled after the ship got jammed, and the blockage has disrupted global supply chains, threatening costly delays for companies already dealing with COVID-19 restrictions.
Estimates losses
“The ultimate losses will depend on how long it takes the salvage company to free Ever Given completely and when normal ship traffic can resume, but Fitch estimates losses may easily run into hundreds of millions of euros,” Fitch said.
Claims totaling millions of dollars
According to industry sources, The owner and insurers of Ever Given also face claims totaling millions of dollars even if the ship is refloated quickly.
Losses be reinsured?
A large share of losses will probably be reinsured by a global panel of reinsurers, Fitch said, adding that this will add pressure to first-half earnings.
A natural disaster?
Global reinsurers are already on the hook for natural disasters such as winter storms in the U.S. and flooding in Australia, as well as COVID-19 pandemic-related losses.
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Source: Reuters
