Baltimore incident could drive up marine insurance premiums – Morningstar DBRS

The disruption of maritime activities caused by the Baltimore bridge collapse could cost marine insurance companies $2-4 billion, Morningstar DBRS said in a report.

PHOTO: Francis Scott Key Bridge collapse in Baltimore after collision with a container ship Dali. Maryland Department of Environment

The Port of Baltimore faced disruption when the 116,851-dwt cargo ship, Dali, collided with a pillar on the Francis Scott Key Bridge while leaving the port. As a result of the collision, a section of the bridge collapsed, leading the port authority to suspend all vessel traffic and bunker deliveries at the port and Annapolis Anchorages.

This disruption in maritime activities is anticipated to trigger a significant number of insurance policies, including “marine liability and hull, property, cargo, and business interruption [coverages],” according to a report by credit ratings agency Morningstar DBRS.

Morningstar DBRS, which assesses around 4,000 insurers across various asset classes including marine, highlights that the incident could result in record insured losses. The losses could potentially exceed the $1.5 billion incurred from the Costa Concordia cruise ship capsizing incident in 2012, it estimates.

Insured losses refer to financial damages or liabilities covered by insurance policies. Despite the magnitude of potential losses, the report suggests that they are within the “absorption capacity of the global insurance industry”, making claims “manageable” due to the involvement of multiple insurers and reinsurers.

However, the incident could potentially push global marine insurance premiums higher in the near future, the report warns.

“In our view, these losses will add to the woes of marine insurers who have been facing recent challenges due to the Houthi rebels’ attacks in the Red Sea,” Marcos Alvarez, managing director of Morningstar DBRS said. “We also anticipate that the losses linked to the collapse of the Baltimore bridge will add upward pressure to the pricing of marine insurance coverages globally.”

By Konica Bhatt

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