‘One of the biggest marine claims ever’
Lloyd’s boss: Baltimore disaster to run into multi-billions
THE chairman of Lloyd’s of London has warned that the Baltimore bridge collapse in the US could be the biggest single marine insurance loss ever.
Bruce Carnegie-Brown said Lloyd’s will pick up a major share of the multi- billion pound bill after a huge container ship crashed into the Francis Scott Key Bridge.
He did not put a figure on the total. Analysts have suggested it could top £3bn. Lloyd’s could be on the hook for about 10pc.
The previous record marine insurance loss, of £1.2bn, occurred when the Costa Concordia luxury cruise liner capsized off the coast of Italy in 2012.
Carnegie- Brown ( pictured ) said of the Baltimore crash: ‘It’s early days but I think this could develop into the largest single marine insurance loss ever. It’ll take a couple of years to develop fully but we expect it to be a significant large loss and we’ll have our share of that.’
It came as the insurance market, which has more than 50 member firms, swung to a £10.7bn profit for 2023 after losing £800m the year before.
Lloyd’s enjoyed an upturn for the investment side of its business as well as from insurance underwriting, where it put up prices 7pc in response to inflation, which has increased the cost of paying out claims.
Underwriting profits rose from £2.6bn to £5.9bn.
The combined ratio – a key measure of profitability where anything above 100pc indicates a loss and anything below, a profit – improved from 91.9pc to 84pc, the best level since 2007.
Major claims for the year included wildfires in Hawaii, earthquakes in the Middle East and floods in New Zealand, totalling £1.3bn, which was down from £4.1bn in 2022.
The Baltimore claim stands to make a big dent because it is fully insured.
Other disasters may be costlier overall to companies, states or individuals but less well covered by insurance.
‘People buy more insurance in the US than in most other economies,’ Carnegie-Brown said. ‘The bridge is owned by the state of Maryland and states and governments don’t usually buy insurance but Maryland does – the bridge is insured. ‘Then of course there’s the value of the ship and its cargo. And the thing that will develop more slowly but will be reasonably significant are all of the supply chain challenges that will occur on the back of this.
‘ The ships that are trapped in the port and can’t get out and the ones that were travelling to the port and need to be re-routed will generate second-order claims.
‘It’s the biggest single port for the importation of vehicles into the US.’
Meanwhile, he complained that the London market was losing out to global rivals because of the cautious approach of regulators since the financial crisis.
He said firms wanting to set up at Lloyd’s had to wait nine to 12 months for approval whereas in Bermuda this could be done in 30 to 60 days.
Carnegie-Brown said regulators have become used to looking for risk rather than being open to opportunities since the crisis. ‘If you’ve spent 15 years trying to take risk out of the system it’s very hard to change your mind about this,’ he said.
‘It’s a bit like when you park your defence in a football game to get a no-score draw and then the opposition scores.
‘ It’s quite hard for you to change your mindset to get down the other end of the pitch and score a goal.’