The blocking of the Suez Canal and resulting disruption to global shipping is likely to cause a large loss event for the reinsurance industry, Fitch Ratings says.
The agency said in a report Monday, that the event will reduce global reinsurers’ earnings but should not materially affect their credit profiles, while prices for marine reinsurance will rise further as a consequence of the container ship ‘Ever Given’ grounding in the canal.
Fitch said that accidents involving large container ships can cause property claims of over USD1 billion, but these are mostly related to salvage
Insurance costs include claims related to insurance of the ship’s hull and cargo and delayed arrival of goods to its final destination, in addition to the salvage costs that will be borne by insurance companies.
Suez Canal Ship freed
For his part, Osama Rabi, head of the Suez Canal Authority, expected the resumption of maritime navigation in the canal at noon today.
The ship stuck since last Tuesday was freed today. He said that the crews are waiting for the water level of the canal to rise, to facilitate the ship’s float and transport it to the lakes.
The accident will also lead to more pressure on the profits of international insurance companies for the first half of 2021, especially as their profits have been affected due to disasters and winter storms in the United States and floods in Australia, and certainly the Coronavirus pandemic.
Hundreds of other container ships, bulk cargo ships and tankers loaded with oil are still waiting on either side of the canal. The number of these ships reached about 356 ships, according to the Suez Canal Authority.
On the other hand, news of the success of the efforts to move the ship pushed oil prices to retreat immediately. Oil was trading slightly lower this morning.
Oil prices have fluctuated significantly over the past few days. Dealers and investors have sought to balance the impact of the closing of a major transit point for trade, and the broader impact of lockdown measures aimed at containing infections with the Coronavirus.