Baltimore Bridge Collision Should be Manageable For Insurers

The latest from GlobalData, who don’t see the Baltimore bridge incident as having a significant impact for insurers;

The Francis Scott Key Bridge collapse with the crash of container vessel Dali on March 26, 2024, in Baltimore was one of the most significant maritime losses in US history so far. As a result of the damages caused in terms of business interruptions and logistics scrambles, insurers will witness higher claims in 2024 across general insurance lines such as property, liability, and marine, aviation, and transit (MAT) insurance. However, the incident is unlikely to have a significant impact on the overall profitability of US insurers, as the average loss ratio of general insurance is expected to remain at 78.8% over 2024–28, according to GlobalData, a leading data and analytics company.

Manogna Vangari, Insurance Analyst at GlobalData, comments: “Baltimore bridge is one of the largest ports in the US and an important trade hub for coal, cars, and farm and construction equipment. The bridge collapse prompted the government to block the port until May 2024. The collapse is expected to result in a loss of economic activity and high insurance claims from business interruptions, supply chain disruptions, potential liabilities for accidental deaths, and marine insurance for local insurers and reinsurers.”

According to GlobalData’s Global Insurance Database, property and motor insurance claims are expected to account for 11.9% and 14.7% share of the total general insurance claims in the US in 2024, amounting to $200.7 billion and $247.7 billion, respectively. Additionally, liability and marine, aviation, and transit (MAT) insurance claims are expected to account for a 6.6% and 1.3% share, amounting to $110.8 billion and $22.7 billion, respectively. However, with this event, the actual claims in 2024 might increase once the complete impact of the damage is realized.

The incident is expected to lead to the biggest marine insurance payout that is expected to cost insurers billions of dollars in losses. It is expected to surpass the marine losses of the Costa Concordia cruise ship disaster in 2012.

As reinsurers within the reinsurance pool of the International Group of Protection and Indemnity (P&I) Clubs will bear most of the insured losses resulting from this disaster, the profitability of individual reinsurers is not expected to be impacted. P&I clubs, which offer liability insurance for ships together with personal injury and marine environmental damage coverage, are likely to face a significant collective loss.

Vangari adds: “In the short term, insurers may re-evaluate risk exposure and adjust premiums to maintain profitability, which is expected to increase the premium rates for MAT, liability, and property insurance policies.”

As a result, the US general insurance industry is expected to grow from $2.4 trillion in 2024 to $3.3 trillion in 2028, in terms of gross written premiums (GWP), at a CAGR of 8.9% over 2024–28.

Vangari concludes: “The Baltimore bridge crash incident could translate into higher claims than anticipated for US insurers and reinsurers in 2024. The incident will also highlight the importance of taking sufficient marine and liability insurance coverage, which could support the growth of these lines over the next five years.”