Insurance Companies Face 5.4 Trillion Won Loss from Baltimore Bridge Collapse

"Global Marine Insurance Rate Increase Expected"
Significant Economic Impact...378 Billion Loss from 1 Month Closure

Insurance companies are expected to bear costs of up to 5.4 trillion won due to the collapse of a bridge in Baltimore, USA.

On the 27th (local time), according to major foreign media, insurers and analysts assessed various potential losses including property, cargo, and trade credit resulting from the closure of the Baltimore port, arriving at this analysis.

The Francis Scott Key Bridge in Baltimore, Maryland, USA, collapsed after colliding with a container ship.
[Image source=Yonhap News]

In the early hours of the previous day, a large bridge at the entrance of Baltimore port in Maryland, on the US East Coast, collapsed after a collision with a large container ship. Six workers went missing in the accident, and operations at Baltimore port, a major export-import port on the US East Coast and the largest automobile export-import port, were suspended.

Marcos Alvarez, Director of Global Insurance Ratings at Morningstar DBRS, said, "Depending on the duration of the Baltimore port closure and the scope of business interruption compensation, insured losses are estimated to be between $2 billion and $4 billion (approximately 2.6996 trillion to 5.3992 trillion won)." He added, "There is a high likelihood that marine insurance rates worldwide will face upward pressure." Matilde Jacobsen, Senior Director at insurance rating agency AM Best, stated, "The claim amount will reach tens of billions of dollars." If their assessments are accurate, the Baltimore bridge collapse will surpass the 2012 Costa Concordia luxury cruise ship disaster, which recorded the largest losses among maritime accidents.

However, some analyses suggest that the impact on the overall insurance industry will not be significant because the losses are dispersed. Brandon Holmes, a Moody’s rating analyst, said, "About 80 reinsurers provided insurance to the ship insurers. Although the total number of claims is expected to be high, they will be spread across many insurers, so it will not be significant for individual reinsurers."

Beyond insurers, the overall economic impact is also substantial. Economic software analysis company IMPLAN stated that the initial estimated cost for the federal government to rebuild the Baltimore port bridge is about $600 million (approximately 810.2 billion won). It also analyzed that closing Baltimore port for one month would cause losses of $28 million (approximately 37.8 billion won) to Maryland. According to Maryland, Baltimore port handled 52 million tons of international cargo worth $80 billion (approximately 108 trillion won) last year.

Julian Hohn, Partner at McGill & Partners specializing in ports, terminals, and logistics, said, "The economic disruption and pain felt by businesses and individuals in Maryland and the Baltimore area will be extensive, and it will take years to fully compensate those affected by this accident."