Reinsurers will take bulk of P&I claim after Baltimore bridge collapse
The insurance claims from the Baltimore bridge collision and collapse that run up the P&I chain will chiefly be borne by reinsurers, led by AXA XL, whose XoL coverage for the International Group of P&I clubs attaches at $100 million.
“Reinsurers will bear the bulk of the insured cost of the collapse of the Francis Scott Key Bridge in Baltimore,” Matilde Jakobsen, senior director of analytics at insurance rating agency AM Best, said of outlook.
The cargo ship which struck the Francis Scott Key bridge, the Dali, figures on the fleet listing of the Britannia P&I mutual shipowner insurance club, one of 12 constituent P&I clubs of the International Group of P&I clubs which buys $3.1 billion of XoL marine liability limit for the group above member club mutual limit.
“While the total cost of the bridge collapse and associated claims will not be clear for some time, it is likely to run into the billions of dollars - well above the USD 100 million attachment point for the GXL contract,” Jakobsen noted.
The International Group last signed off on its 2024/25 pooling and group excess of loss reinsurance contract in late December, putting the basic P&I cover to a $2.1 billion limit plus an aggregate $1 billion spillover across split perils. The deal with an unspecified panel of reinsurers was led by AXA XL.
Insurance claims will stretch well beyond the P&I arena. Jakobsen expects developments in lines including property, cargo, liability, trade credit and contingent business interruption.
“The claim will likely involve several insurers, reinsurers, subrogation, and legal issues and will serve to add to the increasing challenges in reinsurance availability,” she said.
Moody’s Ratings analyst Brandan Holmes said: “The Key Bridge collapse in the US will likely lead to substantial insurance claims against the vessel’s insurers related to the ship and its cargo, but more significantly the destruction of the bridge and disruptions to the port.
The majority of claims will fall to global (re)insurers, as approximately 80 different (re)insurers provide around $3 billion in cover to the ship’s insurers, Britannia P&I Club and the International Group (IG) of P&I Clubs. While the total claim is expected to be high, it is unlikely to be significant for individual (re)insurers since it will be spread across so many.”
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