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James Vickers, president of Willis Reinsurance International, said that the disruption of navigation in the Suez Canal will likely lead to huge compensation claims from reinsurers, which will increase upward pressure on marine reinsurance rates.
Official investigations began this week into how the huge container ship Evergiven ran aground in the canal, which led to the suspension of navigation in the main global waterway for nearly a week.
Vickers also told «Reuters», that the losses of the reinsurance sector “will not be a small amount of money.” He added that the disruption of navigation in the canal was the latest in a growing number of man-made disasters that result in reinsurance losses, in addition to a list of natural disasters that occurred over the past year.
Reinsurers help insurance companies cover claims in extreme events like hurricanes in exchange for a portion of the premium. Usually reinsurers raise prices after incurring large losses.
Vickers said that even before the Suez Canal incident, the marine market did not “need a lot of encouragement to continue moving in an upward direction.”
The COVID-19 pandemic is also putting upward pressure on reinsurance rates across the board.
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