Egypt: Suez Canal Blockage Will Cause Big Losses for Insurance and Reinsurance Companies Expect to Receive Numerous Compensation Claims

Blocked for 6 days, since March 23, traffic on the Suez Canal, one of the busiest waterways in the world, resumed this afternoon of March 29. Traffic, although restored on this route, on which more than 12% of world trade passes, has resulted in delays in the delivery of many products and goods.

This blockage will also cause great losses for insurance and reinsurance companies who expect to receive numerous indemnity claims from companies whose goods were stored in Ever Given, the container ship of 400 meters long.

“This event will reduce the revenues of global reinsurers, while the prices of marine reinsurance will rise further,” warned Fitch Ratings, analysis published on March 29.

“Losses could easily reach hundreds of millions of euros […] Accidents involving large container ships can result in property claims of over $ 1 billion, but these are mainly related to the rescue. Since the Ever Given should still be able to travel once released, claims related to hull and cargo insurance, including salvage (which will be the responsibility of the shipowner’s hull insurer), should clearly remain. below this level, ”continues the financial rating agency.

For nearly a week, traffic on the Suez Canal seaway has been obstructed by the container ship. Weather conditions as well as technical and human errors were cited by the Suez Canal Authority to explain this incident which blocked nearly 425 ships.

According to the specialist journal Lloyd’s List, the container ship blocked the equivalent of around 8.1 billion euros in goods every day. Insurer Allianz, meanwhile, said each day of lockdown could cost global trade between $ 6 billion and $ 10 billion.

Source Ecofin Agency