The recent traffic jam at the Suez Canal had devastating consequences. The incident impacted global trade to a large degree, but it seems that it will have even more far-reaching effects on the marine reinsurance market.
Marine reinsurance premiums have been on an upward trend for years. But the blockage is expected to make the rates reach unprecedented heights. The disrupted shipping schedules will result in substantial losses to the insurance market.
Lloyd’s of London chairman, Bruce Carnegie-Brown, commented pointedly on the large losses expected. Meanwhile, Fitch Ratings estimated hundreds of millions of euros worth of reinsurance claims.
In the absence of other notable events, the Suez Canal blockage wouldn’t be such a disruptive event. However, in light of recent winter storms in the US and large-scale flooding in Australia, the reinsurance market will significantly reduce 2021 earnings for reinsurers.
Additionally, 2020 was a tough year for reinsurers that found themselves paying out claims related to the COVID pandemic across the globe.
Commercial insurers experienced a similar squeeze but performance remains solid for the moment thanks in part to primary and reinsurance premiums. At the moment, the chain of insurance claims from the blockage hasn’t been linked to any bankruptcies in the reinsurance market.
The future is largely uncertain at this point for reinsurers, but there’s no doubt that maritime premiums, as well as other serious disaster insurance premiums, will rise in the coming quarters.