Marine reinsurers face Baltimore loss blow

Howden Re said the impact is expected to fall largely on reinsurance and retrocession markets.

The insured losses from the collapse of Baltimore’s Francis Scott Key Bridge, caused by the Singapore-based vessel Dali striking the structure, are now expected to exceed $2.8b.

This makes it the largest marine insurance loss on record and more than double initial estimates of $1.5b following the incident in March 2024, according to Howden Re.

The loss surpasses the previous benchmark set by the Costa Concordia disaster in 2012, which resulted in insured losses of around $1.6b. 

The Baltimore incident has become a defining event for the marine (re)insurance market, with its scale only becoming clear after prolonged legal, salvage and reconstruction developments.

Much of the increase has been driven by the cost of rebuilding the bridge. Around $2.5b of the total is linked to a settlement framework between the State of Maryland and insurer Chubb. Additional costs stem from pollution liabilities, wreck removal and lost toll revenue.

The loss is expected to fall largely on reinsurers and retrocession markets rather than primary insurers. 

Whilst early expectations suggested the full $3b reinsurance limit of the International Group of P&I Clubs could be utilised, the final settlement did not rely on statutory limits on shipowner liability. 

As a result, losses have flowed through multiple layers of reinsurance cover.

Market participants say the financial impact is concentrated among large reinsurers and retrocession providers, where exposure to a single event of this size can be significant relative to capital.

Despite this, the broader insurance market has the capacity to absorb the loss. 

Marine portfolios are typically written alongside larger risks such as natural catastrophes, where losses can reach significantly higher levels. 

As a result, the Baltimore loss, whilst material for the marine segment, is being assessed within wider portfolio considerations.