Insurance fallout from the collision of a container ship with the Francis Scott Key Bridge in Baltimore will take a decade or more to play out in the courts, said an executive with a commercial lines broker.
Liability, business interruption, trade credit and supply chain issues are among complex issues to be determined over the long term, Josh Kirklin, executive vice president and oil and gas co-leader, CAC Specialty, told BestWire.
The liability issue is “massive” and will likely take place for over a decade in the courts, he said.
Kirklin’s observations come as the task force set up by federal and state agencies, as well as the manager of the container ship “Dali,” begin the process of clearing debris and unloading containers.
The “Unified Command” task force began to remove containers onboard the Dali at the Key Bridge incident site on Sunday, it said in a statement.
“Salvors removed containers from the M/V Dali as part of the effort to gain access to the portion of the Key Bridge that lies atop the ship,” the task force said. “The transfer of containers from the M/V Dali will continue in the coming days, as weather permits.”
The Key Bridge Response 2024 Unified Command includes the U.S. Coast Guard, U.S. Army Corps of Engineers,
Maryland Department of the Environment, Maryland Transportation Authority, Maryland State Police and risk management and emergency response partners Witt O’Brien’s representing ship manager Synergy Marine.
Kriklin said the “prevailing sentiment” is an ultimate insured loss seems to be about $3 billion in the aggregate. “That’s a reasonably formed headline number, but we are at the very early
stages of what this will ultimately be” and may not know until 2030 at the earliest, he said.
As a marine and energy broker for clients worldwide, CAC believes the other side of the coin is, for insurers with a good risk profile, “it’s a very resilient market,” Kirklin said. “I think there will be some new ground broken on this,” he said.
Noting the Port of Baltimore is a busy port on the eastern Atlantic coast, Kirklin said customers on the receiving end of goods from various parts of the world are “probably going to be impaired.”
“Disruption is real and will have to play out over days, weeks and months,” he said. “I’m comfortable that the insurance markets will respond in their respective roles.”
Aside from liability for the ship itself, the containers on ship will be dealt with depending on the components and nature of the cargo. Kirklin said there will be different logistical plans to try to remove them either one by one or if the vessel has integrity and can float back to the port where they then offloaded.
“Only those on the ground with immediate access to the recovery effort can answer,” he said.
Wreckage and debris removal continues at the site, including portions of a bridge span, the task force said. “While marine traffic is still limited, one vessel has transited through in the last 24 hours, totaling 32 since the creation of the temporary alternate channels,” the task force said Sunday.
“The Unified Command is concurrently progressing on its main lines of effort to remove enough debris to open the channel to larger commercial traffic and refloat the Dali,” said Coast Guard Capt. David O’Connell, federal on-scene coordinator, Unified Command.
Removal of the ship’s containers is a critical step required to safely move the Dali and eventually fully re-open the Fort McHenry Channel, the task force said. Removing containers allows for safe access to then remove the pieces of the Key Bridge that lie across the ship’s bow, taking weight off the ship and ultimately allowing for the movement of the ship, it said.
“If you think of the cargo as innocent bystanders, these are owners of goods that are in and out of port terminals,” Kirklin said. They don’t have direct control over the navigation of the vessel. Kirklin said there is a big distinction between the cargo and the vessel owners and insurers.
The impact on the port itself is being quantified and there is a bottleneck where the bridge went down, he said. Marine traffic is being rerouted until the area is cleared and safe. Adjustments being made to keep commerce fluid.
Kirklin said the grounding of the container ship Ever Given in the Suez Canal is a comparable example of how disruptive such an incident can be.
As for business interruption, costs will depend on how litigation plays out and there could be any number of liability angles, Kirklin said. Some may have direct responsibility for business interruption facing the customers of those goods and throughput and traffic to the port of Baltimore, he said.
Recovery work on property insurance coverage for the owner of the collapsed bridge in the container ship collision began within a few hours of the March 26 event as executives of broker WTW described a lengthy and complex process. WTW works with the state of Maryland, the bridge owner, in this complex claim, said Lindsay Cunningham, North American leader, public sector, education and government contracting, WTW.
Debris removal and business interruption and whether financial losses sustained
by the state and other government agencies are related to coverage, are a big factor, said Henry Daar, executive vice president, team leader, North American claims, WTW.
The owner and manager of the container ship filed a petition in a Maryland
federal court in an effort to head off potential liabilities of up to $43.7 million as an investigation gets under way to determine the cause of the disaster.
Grace Ocean Pte Ltd., owner of the Singapore-flagged container ship “Dali,” and Synergy Marine Pte Ltd., which manages the vessel, filed a petition for exoneration from or limitation of liability in U.S. District Court in Maryland.
Marine protection and indemnity insurer Britannia, a participant in the Dali’s coverage, earlier said the investigation into the container ship Dali’s collision with the bridge is being directed by a “unified command and joint information center” set up to coordinate responses and to provide information.
Britannia told BestWire it won’t comment further on the ongoing investigation.
Lloyd’s Chief Executive Officer John Neal recently said he sees a “complex and expensive” industry loss after the container ship crashed into the bridge.