The collapse of the Francis Scott Key Bridge in Baltimore will give the insurance industry an opportunity to demonstrate its worth, according to Lloyd's of London's top executive.

"The good news is we can show the value of insurance on what is a complex and expensive loss, because each element of that claim will be dealt with," CEO John Neal said during a call for Lloyd's annual results.

For Lloyd's in particular, which anticipates a certain level of large individual losses and natural catastrophe claims annually, "this is not outside of the normal levels of expectations of what we should see in a given year." Neal did not provide an estimate of the cost of the disaster to the marketplace.

The Francis Scott Key Bridge fell into the Patapsco River in the early hours of March 26 after being struck by a container ship, which had experienced a power failure on its way out of the Port of Baltimore. The disaster is potentially significant for the marine insurance and reinsurance market, with some predicting it will exceed the $1.5 billion claims bill from the Costa Concordia disaster in 2012. Morningstar DBRS in a research note estimated that the event could cost insurers between $2 billion and $4 billion.

That loss is widely spread across global insurers and reinsurers, and so it is unlikely to be significant to individual underwriters, according to Moody's.

Lloyd's reported a profit before tax of £10.7 billion in 2023, compared with a loss of £769 million in 2022, when its result was hit by unrealized investment losses, offsetting an improvement in underwriting performance.

In 2023, Lloyd's reported an investment return of £5.3 billion, compared with the £3.1 billion loss it reported in 2022. Underwriting profit increased to £5.9 billion from £2.6 billion a year earlier. The combined ratio, which measures underwriting profitability, improved to 84.0% from 91.9%, and much of that was due to a lower claims bill from large losses, which contributed just 3.5 percentage points to the ratio. Large losses were responsible for 12.7 percentage points of the prior year's combined ratio.

For 2024, Lloyd's predicts gross written premium of £57 billion, plus or minus 5%, compared with the £52.1 billion gross written premium it reported in 2023. It also expects a combined ratio of 90% to 95% and an investment return of about 4%. The combined ratio assumes an allowance of 10-11 percentage points for large claims.

CFO Burkhard Keese said 2023 had been an "exceptional year" and "difficult to repeat." Lloyd's does not see any signs that the current favorable market conditions, characterized by higher prices and tighter terms and conditions, would subside, but added that there was "absolutely no room for complacency" with inflation still high and challenges in the US casualty insurance market where "the increased risk of litigation requires forward-looking underwriting."