Potentially huge claims related to the Huntington Beach oil spill in Orange County California in the US could eventually land on protection and indemnity insurers.

Investigators are attempting to identify the vessel that is understood to have dragged its anchor over an Amplify Energy pipeline causing the spill in the western US state.

The incident comes as International Group's reinsurance costs are being renegotiated and could be impacted severely by the disaster.

Estimates vary, but about 144,000 gallons of oil is thought to have leaked from the pipeline and caused widespread pollution and damage to the local environment and wildlife.

The first federal class action is being brought by law firm Milberg Coleman Bryson Phillips Grossman. The firm has successfully won several billion-dollar class action awards.

The first claimant in the law firm's class action is Peter Moses Gutierrez, a local disc jockey, who said the spill has put his "entire livelihood at stake".

Milberg is calling for other potential claimants to join the action and is casting its net wide. It said claimants could include commercial fishers, tourism businesses, homeowners whose house price may have been affected and oil rig workers who feel their jobs are under threat.

With a ship understood to have caused the spill, US litigators could attempt to eventually recover claims from the International Group of P&I Clubs' pooled claims scheme and reinsurance cover.

Party of interest

The vessel, which is believed to have hit the pipeline as long ago as January 2021, has not yet been identified.

The 13,200-teu MSC Danit (built 2009) was recently boarded by US Coast Guard (USCG) and National Transportation Safety Board marine casualty investigators at the Port of Long Beach as a "party of interest".

At least two other containerships have been investigated by the USCG as part of the investigation.

The speculation around which party will eventually pay for the spill will not help the International Group as it seeks to renegotiate its two-year deal with reinsurers.

The International Group of P&I clubs is likely to call on its reinsurance cover to pay for the 203,000-dwt Wakashio (built 2007) casualty. Photo: Mobilisation Nationale Wakashio

The International Group's reinsurers provide cover to the pool scheme for claims of more than $100m and the potential claims from the Huntington beach spill could easily exceed that figure. Reinsurers will be concerned they will eventually land up with a large part of the bill.

Costly calls

The talks come after the International Group has already had to make several costly calls on its reinsurance cover, including the $840m in costs related to the 7,700-ceu Golden Ray (built 2016) wreck removal off the Port of Brunswick in the US state of Georgia.

The 203,000-dwt Wakashio (built 2007), the 20,388-teu Ever Given (built 2018) and the 2,743-teu X-Press Pearl (built 2021) are also likely to result in the International Group calling on its reinsurance cover.

The International Group's reinsurance costs are passed on to shipowners through their annual premium, which will come up for renewal in February next year.

Brokers have already warned shipowners to expect a significant rise in premium due to the increased reinsurance costs.

Brokers suggest the International Group may also be forced to reconfigure the structure of its reinsurance scheme to reduce the impact of the increase in rates on shipowners.