Benzinga - by Benzinga Neuro, Benzinga Staff Writer.
The catastrophic collapse of Baltimore’s Francis Scott Key Bridge, struck by a Singapore-flagged container ship, could trigger a massive insurance payout, potentially reaching a staggering $4 billion.
Surpassing Previous Record: This incident, which tragically left six people missing and shut down a major U.S. port, could eclipse the record insured losses ($1.5 billion) from the 2012 Costa Concordia cruise ship disaster, as per a Reuters report.
Sharing the Burden: While the total claim is expected to be high, the International Group of P&I Clubs, insuring most of the world’s ocean-going vessels, has remained silent, according to Reuters. Their reinsurance coverage, spread across roughly 80 reinsurers, is unlikely to be significantly impacted by any individual player.
Notably, Britannia P&I confirmed that the Dali, the involved vessel, was insured with them, and French insurance and reinsurance company AXA SA (OTC:AXAHF) was identified as the lead reinsurer, as per a spokesperson at the Insurance Information Institute quoted by Reuters.
The spokesperson also said she believed that Aon PLC (NYSE:AON) served as the insurance broker for the property policy of the bridge. Insurance Insider reported that Chubb Ltd (NYSE:CB) was involved as well. As of now, neither company has commented on the matter.
Uncertainties Remain: The final payout hinges on factors like the port closure duration and the extent of business interruption coverage. Analyst Marcos Alvarez of Morningstar DBRS estimates insured losses could range from $2 billion to $4 billion, as per the report.
Vital Link Destroyed: The Key Bridge, a critical artery facilitating over 30,000 vehicles daily, was destroyed by a cargo ship operated by Synergy Group and chartered by Maersk. President Biden pledged federal support for reconstruction.
Investigating the Cause: Investigators are probing the potential involvement of contaminated fuel in the ship’s power loss and subsequent collision. The Dali’s operating history and safety record, along with those of its owner and operator, will be under scrutiny.
A Recurring Problem: Sadly, such incidents aren’t uncommon. According to a 2018 World Association for Waterborne Transport Infrastructure report, there have been 35 major bridge collapses globally between 1960 and 2015 due to ship collisions, with 18 occurring in the U.S.
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