DBRS Limited (DBRS Morningstar) published a commentary titled “The Suez Canal Blockage Is Likely to Have a Limited Impact on the Global Insurance Industry” that discusses the insurance implications of the ultra-large container ship Ever Given blocking the strategic canal for almost a week, DBRS Ratings Ltd UK reported.
The key highlights include:
- On March 23, 2021, the ultra-large container ship Ever Given ran aground sideways and blocked the Suez Canal in both directions. Traffic through the canal resumed on March 29.
- The blockage could affect a number of marine insurance coverages, including hull & machinery and protection & indemnity, among others.
- In DBRS Morningstar's view, insured losses should remain manageable given the relatively short duration of the blockage, the low prevalence of delay cargo insurance, and the frequent use of deductibles in marine policies.
“The Suez Canal blockage could affect multiple insurance policies given the complexities of marine insurance and the number of parties involved. The first consideration is whether the ship itself sustained damage when it ran aground or during salvage operations,” says Marcos Alvarez, Senior Vice President and Head of Insurance. “In DBRS Morningstar’s view, litigation is likely to ensue to determine legal responsibility for the Ever Given blocking the canal. As of now, indications are that the responsible partners would include the owner of the ship, its operator, and the Suez Canal Authority, which requires local pilots to guide ships through the canal.”