Reinsurance Payouts Expected to Cost Hundreds of Millions in Suez Canal Blockage

About 400 vessels were impacted by the closure of the canal. (AP)
About 400 vessels were impacted by the closure of the canal. (AP)
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Reinsurance Payouts Expected to Cost Hundreds of Millions in Suez Canal Blockage

About 400 vessels were impacted by the closure of the canal. (AP)
About 400 vessels were impacted by the closure of the canal. (AP)

Reinsurers will likely bear most of the expense for the grounding of a giant container ship that halted shipping traffic through the Suez Canal last month. Payouts are expected to cost hundreds of millions of dollars.

International shipping through the canal ground to a halt when the 400-meter Ever Given ran aground and blocked the canal on March 23. It took nearly a week for rescue teams to free the vessel.

About 400 vessels were impacted by the closure of the canal, with some having to take the much longer route around Africa to deliver their cargo.

Ships usually have protection and indemnity (P&I) insurance, which covers third-party liability claims. Separate hull and machinery insurance covers ships against physical damage.

Alan Mackinnon, chief claims officer for UK Club, the Ever Given’s P&I insurer, told Reuters that the club expected a claim against the ship’s owner from canal authorities for possible damage to the waterway and loss of revenue. The club also expects separate claims for compensation from the owners of some of the delayed ships.

“I expect we will get a claim from the Egyptian authorities quite soon, and the claims from the other shipowners will trickle in over the coming months,” Mackinnon said.

Osama Rabie, chairman of the Suez Canal Authority, said last month that losses and damages from the blockage could hit around $1 billion, although the actual amount would be calculated after investigations are completed.

The UK Club will cover the first $10 million in P&I losses, Reuters reported. After that, a wider pool of P&I insurers will cover up to $100 million. At that point, reinsurers would step in to cover up to $2.1 billion in claims, and P&I insurers would contribute for part of a further $1 billion in coverage, according to Reuters.

When asked if claims could reach the upper limits of coverage – around $2.1 billion to $3.1 billion – Mackinnon told Reuters that “We are confident we are not in that territory at all.”

“This is not an existential moment for the P&I sector,” Mackinnon said. “It may be a large claim, but we are structured to deal with large claims.”

DBRS Morningstar analysts said that total insured losses “will remain manageable given the relatively short period of time that the canal was blocked.”

However, Lloyd’s of London said last week that the blockage was likely to result in a “large loss” of at least $100 million for the commercial insurance and reinsurance market.

Yumi Shinohara, deputy manager of the fleet management department of Shoei Kisen, the Japanese company that owns the Ever Given, told Reuters that the company had not yet received any claims for compensation.



Kazakhstan Anticipates Completion of ACWA Power’s Wind Energy Project

ACWA Power announced in March that it would execute the project, which will aid Kazakhstan in reaching its goal of sourcing 50% of its energy from clean resources by 2050. (Photo: ACWA Power)
ACWA Power announced in March that it would execute the project, which will aid Kazakhstan in reaching its goal of sourcing 50% of its energy from clean resources by 2050. (Photo: ACWA Power)
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Kazakhstan Anticipates Completion of ACWA Power’s Wind Energy Project

ACWA Power announced in March that it would execute the project, which will aid Kazakhstan in reaching its goal of sourcing 50% of its energy from clean resources by 2050. (Photo: ACWA Power)
ACWA Power announced in March that it would execute the project, which will aid Kazakhstan in reaching its goal of sourcing 50% of its energy from clean resources by 2050. (Photo: ACWA Power)

Kazakh Ambassador to Saudi Arabia, Madiyar Menilbekov, announced that his country eagerly anticipates the completion of ACWA Power’s first wind energy project in the Zhetysu region. This project, led by the Saudi company, will have a total capacity of 1 gigawatt and an investment value of approximately $1.5 billion.
ACWA Power announced last March that it would execute this project, which will aid Kazakhstan in reaching its goal of sourcing 50% of its energy from clean resources by 2050. Construction is expected to commence in the summer of 2025.
Menilbekov told Asharq Al-Awsat that both countries “have established a solid political dialogue at a high level, along with cooperation in trade, economics, culture, and parliamentary exchange.” He expects this high-level dialogue to continue at the upcoming COP 16 summit in Riyadh.
He further emphasized that trade, economic, and investment cooperation is the cornerstone of the bilateral relationship, noting: “Both countries share a similar outlook on economic development, reflected in Kazakhstan’s Strategic Program 2050 and Saudi Arabia’s Vision 2030.”
The Kazakh ambassador highlighted that last September, the Islamic Development Bank approved financing for projects in Kazakhstan focused on water resource development, enhancing agricultural productivity, and ensuring food security, with total allocations amounting to $1.153 billion.
In tourism, he noted significant progress toward establishing direct flights between the two countries. Air Astana launched flights between Shymkent and Jeddah in October and announced a route from Almaty to Medina, bringing the total to six direct flights. Additionally, Kazakh companies in construction, oil services, and IT have recently opened offices across Saudi Arabia. The Farabi Innovation Center was inaugurated in Riyadh to attract talented entrepreneurs and innovative startups from Nur-Sultan and Central Asia to the Kingdom.
Menilbekov explained that since gaining independence, Kazakhstan’s GDP has grown 17-fold, with foreign trade reaching $139.8 billion last year. He added: “Since 1993, Kazakhstan has attracted a total of $441 billion in foreign direct investment, allowing our economy to remain one of the most dynamic in Central Asia and the post-Soviet region.”
According to Menilbekov, Kazakhstan is the world’s largest producer and exporter of natural uranium, responsible for more than 45% of global production and exports. He also noted that Kazakhstan produces 18 of the 34 raw materials identified by the European Union as “critical materials.”
Menilbekov further mentioned that Kazakhstan possesses 200 million hectares of agricultural land, with about 100 million hectares currently under regular cultivation.