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The reinsurers will bear the costs of grounding the Suez Canal



(Reuters) – Reinsurance companies are about to pay most of the bill for grounding the ship that stopped traffic in the Suez Canal, industry sources say, with payments expected to end up in the hundreds of millions of dollars.

International supply chains were thrown into disarray when the 400-meter (430-yard) Ever Given ran aground in the canal on March 23, with special rescue teams taking nearly a week to free the ship.

About 400 ships were affected by the closure of the canal, which led to some having to move around Africa to get supplies to global markets.

Ships usually have protection and indemnity insurance (P&I), which covers claims against third parties including environmental damage and damage. Separate hull and engine policies (H&M) cover vessels against physical damage.

Alan Mackinnon, chief executive officer of the UK Club, Ever Givens P & I Insurer, said it expected a claim against the ship's owners from the canal authorities for possible damage to the canal and for loss of revenue, and separate claims for compensation from some of the owners of the delayed vessels.

"I expect that we will get a demand from the Egyptian authorities pretty soon and claims from the other shipowners will seep in in the coming months," Mackinnon told Reuters.

The chairman of the Suez Canal Authority, Osama Rabie, said last month that losses and damages due to the blockade ever given could amount to about $ 1

billion, but that the actual amount would be calculated after the investigations. although it was unclear when these would be completed.

The UK Club will cover the first $ 10 million in P&I losses.

In addition, the wider pool of P&I insurance companies will cover up to $ 10,000 million, at which time reinsurers such as Lloyd & # 39 ;s of London will enter into up to $ 2.1 billion in claims. P&I insurers would contribute a portion of an additional $ 1 billion in coverage.

On the question of whether damages could reach the upper coverage levels of $ 2.1 billion to $ 3.1 billion, Mackinnon, UK Club said, "we are convinced that we are not in that territory at all."

"This is not an existential moment for the P&I sector. It may be a big requirement, but we are structured to handle large claims."

Analysts at DBRS Morningstar said the total insured losses "will remain manageable given in the relatively short time the canal was blocked. ”[19659002] Lloyd & # 39; s of London last week said the incident was likely to result in a" huge loss "for the commercial insurance and reinsurance market of at least $ 100 million.

Yumi Shinohara, deputy head of the fleet's management department with Japan's Shoei Kisen, owner of Ever Given, said it had not yet received any compensation claims.

Container ships of Ever Given's size usually have H & M insurance limits of 100 to 140 million dollars, say brokers.

An insurance source in Tokyo, which refused to be named, said the three Japanese H&M insurers would pay for salvage costs and any repair fees for the hull. Mitsui Sumitomo Insurance, the ship's leading Japanese hull insurer, declined to comment.

Other insurance Nce sources said that the Japanese hull insurances would also spread their exposure with reinsurance companies. Catalog

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