On the day that Baltimore's Francis Scott Key Bridge collapsed, President Biden said the federal government would pay “the full cost” of its reconstruction, which some estimates could cost more than $1 billion. . He said the U.S. government would pay for the bridge and nearby port to be reopened “as soon as humanely possible.”
Much of the cost is expected to be recovered from insurance companies, but determining who is ultimately responsible for this deadly disaster remains one of the thorniest and most expensive disputes of its kind. This is likely to become one of the major conflicts. The resolution could take years, including rebuilding the bridge, repairing the cargo ship that hit it and compensating businesses for the disruption at one of the nation's busiest ports.
Mr. Biden is scheduled to visit Baltimore on Friday to assess the damage and said, “I'm not going to wait.”
The legal dispute began this week when Singapore-based shipowner Grace Ocean Private Ltd. and ship management company Synergy Marine filed a motion in U.S. District Court to limit their liability to $43.7 million. . They cited an 1851 law that allows a shipowner's economic damages after a collision to be capped at the value of the ship if the shipowner is found not at fault.
The judge said claims against the ship's owners and managers must be filed in federal court in Baltimore by Sept. 24.
Maritime law and insurance experts say determining liability is especially complex because it involves many parties, from shipowners in Asia to insurers in Europe to companies from around the world that move goods to and from Baltimore. Stated. Numerous lawsuits are expected, a situation compounded by the deaths of six people in the disaster.
“You can't necessarily settle with one party and make it go away,” said Franziska Arnold-Dwyer, a senior lecturer in insurance law at Queen Mary University of London.
Investigators are still determining the cause of such a catastrophic failure of the cargo ship Dali. Why did the huge ship appear to lose power and propulsion before hitting the bridge? and whether negligence was involved. The answer will affect who is responsible for losses that could cost insurance and reinsurance companies up to $4 billion, according to industry experts.
“We are experiencing historic, record losses” for marine insurers, said Sean Keverigan, chief executive of the Insurance Information Institute, an industry group. The higher estimate could exceed the roughly $1.5 billion paid out after the 2012 Costa Concordia crisis, when a cruise ship ran aground off Italy's Giglio island, killing 32 people.
The Port of Baltimore, the top destination for motor vehicle shipping, is nearly closed and losses are accumulating. Authorities announced this week that they had opened a channel around the wreckage to restrict traffic. Full reopening of the port is scheduled for late May.
Little is known about Grace Ocean's owner, a Japanese businessman named Yoshimasa Abe, other than that he is extremely wealthy.
Most of his known wealth comes from his fleet of more than 50 vessels, including container ships, bulk carriers, tankers, and refrigerated cargo ships. They are owned by two Singapore-based companies, Grace Ocean Private and Argosy, which Mr. Abe controls through an offshore company. Shipping data compiler Vessels Value estimates the combined value of the ships, including the damaged Dali, at $2.9 billion.
Ship owners often borrow large sums of money to purchase their fleets. Little of Abe's debt has been made public, but in 2010 Grace Ocean borrowed $250 million from Japanese trading company Mitsui & Co.
Mr. Abe is also the majority owner of two Chinese shipyards on an island off the coast of Ningbo, according to companies Sayari and Wirescreen, which collect and analyze company data. Together, the two shipyards can repair more than 200 ships a year.
Matthew Hunaiolu, who has written about China's shipyards at the Washington-based Center for Strategic and International Studies, said it is unusual for foreign companies to control China's shipyards, especially as domestic industrial consolidation leads to state-owned enterprises. He said this is rare in recent years, when things are progressing in his favor. “There's really not much room for foreign capital,” he said.
Of the 68 member companies, schools, and organizations specializing in ship repair that belong to the China National Shipbuilding Industry Association, an industry group, three are foreign shipyards, and Mr. Abe owns a majority stake in two of them. I own it.
Mr. Abe did not respond to interview requests or answer written questions about his business. “Out of respect for the investigation and legal process, we will not be making any further announcements,” Jim Lawrence, a spokesman for Dali's management company and Grace Ocean, said in an email. He previously confirmed that Mr. Abe owns Grace Ocean Investment Limited. Grace Ocean Investments Ltd. is based in the British Virgin Islands and owns Argosy and its shares. and Private Grace Ocean.
If the shipowner is found liable, its insurance company, a mutual association called the Britannia P&I Club, will cover the first $10 million of the claim, including loss of life, debris removal and property damage. This may include compensation for physical damage and cargo damage. Dali is It transports paper, U.S. soybeans destined for China, and products containing some hazardous materials. According to marine insurance data provider Concirrus and DG Global, which exports agricultural products by loading ships with goods.
Above $10 million, 12 clubs, including Britannia, which make up the London-based International Group of P&I Clubs, jointly insure around 90 per cent of the world's oceangoing tonnage, with claims costs of up to $100 million. You will have to bear the cost. For claims over $100 million, dozens of reinsurance companies will share costs of up to about $3 billion.
The $3 billion figure is widely known and could be a target for companies seeking compensation. “Some reinsurers are expecting the worst,” said Hugo Chelton, managing director at reinsurance broker Howden.
The global reinsurance industry ended last year with $670 billion in capital, according to insurance broker Aon. Bridge damage is expected to be costly, but it is unlikely to be the largest payout reinsurers have faced in recent years. Hurricane Ian, which hit Florida in 2022, caused more than $50 billion in insured losses.
Sridhar Maniem, an analyst at insurance rating agency AM Best, said the potential losses from the bridge collapse are not likely to be large enough to cause long-term damage to insurers and reinsurers. “It shouldn't affect the balance sheet,” he said.
Although the majority of insurance claims are likely to go to the ship's insurance company, other businesses affected by the bridge and port closure may make claims on other insurance policies to cover losses caused by the accident. Insurance losses may increase further.
Scott Cowan, president of the International Longshoremen's Association Local 333, the union representing Baltimore longshoremen, said Tuesday that nearly 2,000 workers are still at the port, including unloading cargo that arrived before the bridge collapsed. He said he was working.
Cowan said union leaders have asked the federal and state governments for help. “The longer the channels are shut down and the longer they are inactive, the bigger the problem will be,” he said. Many jobs at ports are considered day jobs rather than full-time jobs, so they last only as long as the jobs remain.
Oscar Seikaly, chief executive of insurance broker NSI Insurance Group, said government funds for troubled companies may not be fully recovered from insurers.
In recent years, when Washington has stepped in to provide emergency relief after commercial disasters, taxpayers later recovered much of the cost, but the international scope of claims in the Baltimore bridge collapse will further complicate the process.
Rep. Dan Muser, R-Pennsylvania, was furious that Biden offered to immediately use federal funds to pay for rebuilding the Dali Bridge without considering other funding sources, such as the owner of the bridge or its insurance company. said.
“The insurance payments could potentially cover the entire cost of rebuilding the bridge without using any tax dollars,” he said.
White House press secretary Robin Patterson said responsible parties must be held accountable, but added: “We are not waiting to get started on this critically important infrastructure project.”
alain draquelier Contributed to research.