Concerns that protection and indemnity insurers might have to call on their reinsurers to settle a claim from the Suez Canal Authority (SCA) for the grounding of the Ever Given have eased.
The terms of the final settlement are private but are likely to fall somewhere between the $200m offered by the vessel’s owner Shoei Kisen Kaisha and the $550m demanded by the SCA.
The 20,388-teu Ever Given (built 2018) is covered by the UK P&I Club, an International Group of P&I Clubs member.
When the SCA first demanded $916m in compensation, the International Group was expected to have to call on its reinsurance programme. The group pools claims of more than $10m, and reinsurers step in for those above $100m.
Insurance industry sources said the International Group’s share of the initial settlement with the SCA is likely to fall comfortably below $100m.
Hull and machinery insurers are mostly responsible for salvage and damage costs related to a grounding incident, so most of the settlement will have to be shouldered by Japan’s Mitsui Sumitomo Insurance Group and its co-insurers in the vessel.
There may be some additional P&I claims yet to come related to cargo, which will take sometime to establish.
That will come as some relief as the P&I clubs enter into renewal negotiations over a two-year reinsurance contract that provides up to $3bn in cover.
But another shadow is being cast over those renewal talks by the eventual bill for the loss of the 2,742-teu containership X-Press Pearl (built 2020) after a fire off Sri Lanka. The X-Press Pearl was covered by the London P&I Club.
The vessel was lost after an extensive cargo fire and P&I insurers are likely to find themselves on the hook for salvage, pollution and commercial damage.
Sri Lanka has suffered extensive pollution and has already made an initial call for $40m in compensation.
Another concern facing P&I insurers is the potential wreck removal cost. The loss of the 3,032-teu Rena (built 2011), a containership of similar size, rang up claims of over $400m for the International Group when it went aground off New Zealand in 2011.
But that involved a complicated, protracted and expensive wreck removal operation that insurers will be hoping to avoid in the case of the X-Press Pearl.
The wreck of the X-Press Pearl is currently being watched by US salvage company Resolve Marine with a decision over a wreck removal operation delayed until the current monsoon season is over.
Salvage sources said the question for the X-Press Pearl wreckage will be whether it is possible to simply refloat the rusting hulk and take away the wreck.
It might even be possible to tow the wreck out to sea and sink it, as happened with the 300,000-dwt Stellar Banner (built 2016) when it grounded off Brazil and the forward section of the 203,000-dwt Wakashio (built 2007) off Mauritius.
The worst scenario could be that after several months aground the wreck will be structurally impaired and, to avoid the risk of causing any further pollution, will have to be broken up on site in what would be another costly wreck removal.
