Baltimore Bridge Collapse 26/03/2024

Baltimore bridge collapse

A fully laden container ship, Dali, struck the Francis Scott Key Bridge in Baltimore early in the morning of Tuesday 26th March. It has been reported that the ship lost power and issued a distress call in the moments before  impact. Six construction workers are missing, presumed dead. The bridge itself has collapsed into the Patapsco River. The US transportation secretary said that he expects a major and protracted impact to supply chains in what is one the busiest port cities in the world.

Argenta comment

An event of this nature will involve several lines of insurance and reinsurance including property (physical damage to the bridge), motor (physical damage to vehicles that were on the bridge), cargo (containers damaged by bridge collapsing on to them and delayed delivery, including consequential losses), hull (damage to the vessel itself), liability (workers’ compensation for the road maintenance workers injured or killed and the vessel’s owners and operators to all the parties impacted, including for removal of the bridge wreckage, plus local businesses impacted by the road diversion now in place), trade credit and contingent business interruption (the vessel, port and shipping customers). Lloyd’s syndicates have a significant presence in most of these classes of business. At this early stage, the largest part of any claim is expected to fall on the International Group of P&I Clubs. The International Group comprises 12 protection and indemnity clubs providing marine liability to 90% of the world’s ocean going tonnage.  Whilst various other lines will be triggered many insurers will be able to subrogate against the P&I Club that insured the vessel.

The International Group buys  $3.1 billion of reinsurance cover; many syndicates participate both on the original placement and also on other specific reinsurances for the group’s exposures. While no meaningful estimate of insurance cost is available at present, it does seem likely that some of this loss will pass up the chain of insurance to reinsurance and in turn to reinsurers’ retrocessionaires. The immediate reaction is that this will be a sizeable loss for the marine market. 

The most recent comparator was the loss of the cruise ship, Costa Concordia, in 2012. She hit a reef off the Italian coast and ran aground at Isola Giglio, Tuscany. 32 lives were lost. At the time, insurers paid aggregate claims of US$1.5 billion  for hull, liability and removal of wreck. Lloyd’s share of the overall loss was in the region of £200m, adding a little over 1 percentage point to the loss ratio reported in the year.  The consequential impacts, inflation and US location suggest that this incident may be more costly.

We expect more information on the potential impact of the Baltimore loss from syndicates in the coming weeks and will report further in due course.