A cargo ship lost power and rammed into the Francis Scott Key Bridge in Baltimore, causing it to collapse. The destruction led to sixth deaths and the disruption of a crucial U.S. shipping port. Industry experts expect insurance claims rippling from the incident to total several billions of dollars.
Insurance Recovery Practice Group Partners Micah Skidmore and Adrian Azer spoke with Fox Business and Law360 about how those insurance claims will likely be handled and what role the federal government could play in the process.
Read excerpts below:
Fox Business - Baltimore disaster could see record insurance payouts — but it’s complicated: expert
"You're going to have arguments from the construction company that they're not actually liable for the deaths, because it wasn't their fault. The boat hit, and they didn't really cause the injury," Azer adds.
Azer says that many shipping companies pool their insurance through P&I Clubs, a group structure that shares its loss exposure. P&I Clubs represent around 90% of the world's oceangoing tonnage, covering virtually every type of vessel, according to its website. Its members mutually reinsure each other by sharing claims above $10 million…
"What is also interesting, too, is that President Biden came out and said there's going to be government funding to rebuild the bridge," Azer says. "That’s another complicating factor, and so that's going to be an argument that's being presented that people are going to have to debate. Well, if the government is going to pay a bill to rebuild this, then do you really need insurance, right? I would argue that if there are insurance companies there, then they would have to contribute their amount, but that will have to play out in the court systems."
Law360 - Baltimore Bridge Collision Raises Massive Insurance Fallout
It is still not known exactly what caused the ship to collide with the bridge, and investigations are ongoing. According to a preliminary timeline released by the National Transportation Safety Board on Wednesday, alarms on the ship rang out five minutes before the collision. In that time, the ship's pilot reported that the ship had lost all power.
A key quandary is whether the error was made by a machine or human, according to Micah Skidmore of Haynes and Boone LLP, who told Law360 that "it's hard to put a boundary on what the potential implications are in terms of third-party claims, at this point."
"When you start looking at the secondary impacts, when you start looking at the cause of loss, insurance issues get more complicated in terms of what other policies besides the shipowner's are potentially going to contribute to making the parties whole," he said.
