Despite the anticipated surge in claims stemming from the Baltimore bridge collapse, the profitability of US insurers is not expected to be notably affected, with the average loss ratio projected to remain stable at 78.8% from 2024 to 2028, according to GlobalData.
The catastrophic collapse of the Francis Scott Key Bridge in Baltimore, following a collision with the container vessel Dali on March 26, marks a significant event in US maritime history. The disaster is set to increase insurance claims across various sectors, including property, liability, and marine, aviation, and transit (MAT) insurance.
Manogna Vangari, an insurance analyst at GlobalData, noted the importance of Baltimore as one of the largest ports in the US.
“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,” Vangari said.
The firm’s insurance database indicates that property and motor insurance claims are set to represent 11.9% and 14.7% of the total general insurance claims in the US for 2024, totaling $200.7 billion and $247.7 billion, respectively.
Liability and MAT insurance claims, meanwhile, are also expected to make up 6.6% and 1.3% of the total, amounting to $110.8 billion and $22.7 billion, respectively. The full impact of the disaster might lead to even higher actual claims for 2024 once all damages are assessed.
This incident is being billed as possibly one of the largest marine insurance payouts in history, potentially exceeding the losses from the Costa Concordia disaster in 2012. The majority of these insured losses will be borne by reinsurers within the reinsurance pool of the International Group of Protection and Indemnity (P&I) Clubs, which are unlikely to see a significant impact on their profitability.
P&I clubs provide liability insurance for ships, including coverage for personal injuries and marine environmental damage, and are poised to face considerable collective financial losses.
“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,” Vangari said.
Consequently, the US general insurance industry is projected to grow from $2.4 trillion in 2024 to $3.3 trillion in 2028, at a compound annual growth rate (CAGR) of 8.9%.
“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,” Vangari said.
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