Who’ll pay for the Baltimore bridge crash? It’s complicated.

This week’s tragic collapse of Baltimore’s Francis Scott Key Bridge, caused by the container ship Dali, has rightfully dominated news headlines. The loss of six lives is a terrible tragedy on top of everything, but what lies underneath the maritime crash is an intricate spiderweb of insurance coverages provided by dozens of insurers and reinsurers scattered around the globe, from Bermuda to London to Switzerland. The accident will likely be the largest maritime catastrophe since the 2012 Costa Concordia disaster, and property and liability losses will likely reach the billions. However, the pain will be shared by an enormous roster of insurance providers. The loss reveals how the plumbing of the global (re)insurance industry creates a large pool of capital to absorb the sting from such a disaster by spreading it across dozens of financial shoulders. Albeit a terrible event, Dali’s collision demonstrates that insurance is crucial for ships to sail and broken bridges to be fixed.

In the aftermath of the bridge crash, multiple parties will pore over insurance policy wording to determine who is liable to cover the damage to the bridge, cargo, the ship, and other third parties who suffered losses. Many lines of business will be impacted, including ocean marine hull, third-party liability for the ship, and potentially inland marine insurance for the bridge. 

The bridge was reportedly covered by multiple insurers, led by the Switzerland-domiciled Chubb Corporation, with a reported total limit insured of $1.2 billion on a property policy. Because the ship was responsible for the damage to the bridge, insurers paying claims on the bridge will subrogate against the shipowners—meaning they will recoup their loss by suing at-fault shipowners. The incident could also trigger losses to other insurance lines including auto, contingent business interruption, trade credit, and workers’ compensation. 

The International Group of Protection and Indemnity (P&I) Clubs is a conglomerate of 12 mutual insurers that provide insurance for large ships. In particular, the Britannia P&I Club insures the Dali. While Britannia retains $10 million of coverage, because it operates as a mutual insurer, the other clubs participate in the loss above $10 million. If the loss is above $30 million, the Bermuda-domiciled group captive Hydra Insurance provides reinsurance for each club in the International Group. Axa XL, another Bermuda-domiciled organization, leads with the top layer of coverage at $3.1 billion of reinsurance. There are reportedly 80 reinsurers on the slip— the list of reinsurers and how much coverage they provide. 

In addition to insurers and reinsurers who provided coverage for Dali, other entities that may get tagged include the owners, Grace Ocean Private Ltd.; the ship’s managers, Synergy Marine Group; and the Danish shipping company that chartered the vessel, Maersk.

The impacts don’t stop there. It is possible that we will see higher prices for new vehicles, as the port of Baltimore is the country’s busiest port for transportation of cars and light trucks. 

This will be a very complicated claim, because admiralty law is different from civil law. An 1851 admiralty law caps a shipowner’s liability to the post-crash vessel value. This could result in owners being responsible for only tens of millions of dollars when, absent admiralty law, third-party liability losses could easily climb into nine figures. The loss will doubtless generate litigation and haggling over who is responsible for how much, but the beauty is that a complex network of insurance capacity providers sharing risks remains in place—allowing ships to sail again another day.