Suez Canal being blocked by Ever Given will result in millions of pounds of losses for insurance market Lloyd’s of London, boss warns
- Workers in Suez Canal battling to clear backlog from Ever Given blockage
- Ever Given ship has been refloated, but the fallout is set to continue
- Lloyd’s of London chairman warns of hit from Ever Given saga and Covid-19
The blockage of the Suez Canal by the Ever Given container ship for nearly a week will result in a ‘large loss’ for Lloyd’s of London, its chairman revealed today.
The Canal is battling to clear the backlog after the ship’s refloating this week, days after the blockage threw global supply chains into chaos.
Bruce Carnegie-Brown told Reuters it was too early to estimate the exact loss, but ‘it’s clearly going to be a large loss, not just for the vessel but for all of the other vessels that were trapped and unable to get through.’
Fallout: The blockage of the Suez Canal by the Ever Given container ship for nearly a week will result in a ‘large loss’ for Lloyd’s of London, its chairman said
He added this could mean a loss for Lloyd’s of London of around £73million or more.
Liability insurance claims for ships and cargo hit by the delays are expected to fall initially to the container ship Ever Given’s liability insurer, UK Protection & Indemnity Club, Reuters said.
But, UK P&I Club will also use reinsurance, some of it in the Lloyd’s of London market, industry sources say.
Mr Carnegie-Brown said Lloyd’s of London may be on the hook for around five to 10 per cent of the total reinsurance claims.
Fitch Ratings said this week that global reinsurers were likely to face hundreds of millions of euros of claims due to the incident.
Refloated: The Canal is battling to clear the backlog after the Ever Given’s refloating this week
Today, insurance market Lloyd’s of London also revealed that its payouts for Covid-19 disruption are set to hit £6.2billion for last year, as it swung to a £900million annual loss.
Excluding Covid-19 losses, the market delivered an underwriting profit of £800million. In 2019, the group raked in annual profits of £2.5billion.
Of the whopping £6.2billion worth of payouts linked to the pandemic, Lloyd’s of London said £2.6billion was re-insured, limiting the hit.
Lloyd’s of London saw sales drop last year, with gross written premiums dipping to £35.5billion, which is £400million less than the year before.
Impact: Lloyd’s of London revealed that its payouts for Covid-19 disruption are set to hit £6.2billion for last year
It said this was down to ‘remediation of underperforming business’ as it sought to ‘focus on the quality’ of its custom rather than volume.
John Neal, Lloyd’s of London chief executive, said: ‘Following an extremely challenging year marked by a global health crisis of a scale never seen before, Lloyd’s continued to support its customers with payouts expected to total £6.2billion in Covid-19 claims.
‘The year was also marked by a high frequency of natural catastrophe claims and the UK’s formal exit from the EU, driving further losses and uncertainty.
‘Against this unprecedented backdrop we have made good progress across our performance, digitalisation, and culture transformation plans.’