Two UK-listed insurers confirm exposure to Baltimore bridge disaster

Two UK-listed London insurers have confirmed they will take a hit from the Baltimore bridge disaster.

Hiscox said that it would expect the net loss for the group to be moderate, owing to reinsurance measures in place, while Lancashire said that its potential exposure was “within our expectations”.

Insurer of Baltimore bridge set to ‘pay out $350m’ over Dali disaster

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The admissions by the marine market players came after reports that Chubb, the insurer of the Francis Scott Key Bridge, was preparing to pay $350m to the US State of Maryland.

Claims of some $3bn have been predicted after the 9,962-teu Dali (built 2015) struck a pillar on 26 March bringing down the bridge.

Hiscox said it did not have direct exposure to the business interruption policy of the port or the property policy covering the bridge, but participates in the reinsurance for the International Group of P&I clubs.

“This is a complex claim given the likely challenges of wreck removal and clean up, the rebuilding of the bridge, potential business interruption claims and the tragic loss of life,” it said in a first-quarter trading statement.

“No associated reserves were booked in the first quarter, as it remains an emerging event, however, we expect the net loss to be moderate for the group due to the reinsurance arrangements in place.”

Alex Maloney, the CEO of the Bermuda-based Lancashire Group, said that the market impact of the Dali disaster was still being assessed, however, its “potential exposure will be within our expectations for an event of this type”.

The legal wrangling over the disaster is likely to last years over what could end in one of the biggest insurance payouts seen in shipping.

The ship suffered a reported loss of power and propulsion just before the bridge strike and Baltimore authorities are suing the shipowner and manager claiming the Dali was unseaworthy before it left port.

The FBI has also launched a criminal investigation into the disaster, which left six construction workers dead.

Grace Ocean, the boxship’s owner, and manager Synergy Marine, have lodged a legal claim in the US courts seeking to limit any potential liability to $44m.

The Dali has cover from Britannia P&I Club, which has said it is robust enough to cope with the claims.

The biggest protection and indemnity claims are underpinned by the collective purchasing of reinsurance coverage of up to $3.1bn by the 12 clubs that make up the International Group.

Lloyd’s of London chief executive John Neal told Bloomberg after the disaster that there was “financial muscle” to deal with the Dali claim.

“We would assume these types of losses to occur every year. This is within the levels we might expect. As money is needed, then the money will be available,” he said.