The Ever Given case is a reminder of the fragility of global supply chains, but it raises some important questions about the challenges facing insurers when modelling for such claims, delegates attending a Nautical Institute webinar were told.
While the initial claim by the Suez Canal Authority was in the region of $900m it could end up being substantially lower, and underwriters are now asking whether they need to change their modelling when calculating for such big claims in the future?
Clyde & Co partners Simon Culhane and Jai Sharma, who legally represent over $170m of cargo aboard the vessel when the incident occurred, discussed the legal complexities of the case during the ‘Ever Given Cargo Webinar’ with members of The Nautical institute (NI).
The original claim from the SCA for over $900m have caused underwriters to question if they could be exposed to far greater limits than are currently anticipated
said Mr Culhane, with Jai Sharma adding that the statistical risk on paper of such a casualty is modest, but in practice it was a substantial exposure for insurers that is difficult to model.
What is your exposure? $150m or $900m, and will it cause people to re-assess expectations arising from casualties in Suez
An investigation into the cause of the blockage, which led to the death of a worker during the salvage operation, is still ongoing, making it difficult to establish liability and whether any damages must be paid.
During March 2021, one the world’s largest ships, the Ever Given stuck in the Suez Canal, blocking the traffic for about a week, making world’s headlights and causing supply chain issues.
This incident in addition to problems caused daily by the COVID-19 pandemic could have affected the Suez Canal. However, this did not happen, as the head of the authority explained that during 2021, 20,694 ships crossed the canal from both directions compared to the transit of 18,830 ships during the year 2020, an increase of 10%.
What is more, the total net tonnages amounted to1.27 billion tons compared to 1.17 billion tons during the year 2020, a difference of 100 million tons. An increase of 8.5%.
