Reinsurers set to bear brunt of costs for Suez Canal grounding
Saturday, 04 10 2021, Category: Insurance and Reinsurance, Country: Egypt
Reinsurers are set to foot most of the bill for the grounding of the ship that halted traffic in the Suez Canal, industry sources said, with payouts expected to run into hundreds of millions of dollars.
International supply chains were thrown into disarray when the 400 metre (430 yard) Ever Given ran aground in the canal on March 23, with specialist rescue teams taking almost a week to free the vessel.
Around 400 vessels were affected by the canal’s closure, which led to some having to divert around Africa to get supplies to global markets.
Ships typically have protection & indemnity (P&I) insurance, which covers third party liability claims including environmental damage and injury. Separate hull and machinery (H&M) policies cover vessels against physical damage.
Alan Mackinnon, chief claims officer with UK Club, the Ever Given’s P&I insurer, said it expected a claim against the ship’s owner from the canal authorities for possible damage to the canal and for loss of revenues, and separately claims for compensation from some of the owners of the delayed ships.
“I expect we will get a claim from the Egyptian authorities quite soon and the claims from the other shipowners will trickle in over the coming months,” Mackinnon told Reuters.
Suez Canal Authority chairman Osama Rabie said last month that losses and damages from the Ever Given blockage could reach around $1 billion, but that the actual amount would be calculated after the investigations, though it was unclear when this would be completed.
The UK Club will cover the first $10 million of P&I losses.