The collapse of a bridge near the Port of Baltimore will have major implications for reinsurers and the wider marine insurance market as one of the busiest ports in the mid-Atlantic grinds to a halt.

The Francis Scott Key Bridge fell into the water early in the morning of March 26 after being struck by a cargo ship departing the port for Colombo, Sri Lanka. Maryland Gov. Wes Moore declared a state of emergency, and emergency personnel undertook rescue efforts.

Crew onboard the Singapore-registered container ship Dali notified the Maryland Department of Transportation just before the accident that they had lost control of the vessel and that a collision with the bridge was possible, according to media reports.

While the accident will generate a complex web of claims and liability that may take years to untangle, the financial fallout is expected to fall heavily on the reinsurance industry.

"No doubt both marine insurers and reinsurers will be involved with this loss," said Loretta Worters, a spokesperson for the Insurance Information Institute.

Liability lessons

The Dali is owned by Grace Ocean Pte. Ltd., managed by Synergy Marine Pte. Ltd. and covered by The Britannia Steam Ship Insurance Association Ltd., or Britannia P&I Club. Protection and indemnity (P&I) clubs are mutual insurance organizations that insure and pool liability for the global shipping industry.

All crew members and the two pilots operating the Dali have been accounted for, according to a statement from a Britannia P&I Club spokesperson. The statement noted that the "exact cause of the incident is yet to be determined."

The value of the bridge itself could be about $1.2 billion; it is not yet known if the insured limit on the property placement will fully cover replacement, Worters said. Insurance Insider reported that Chubb Ltd. is the lead insurer of the bridge itself, but any claims are likely to be subrogated to the shipowner's insurance.

The incident will impact the International Group of P&I Associations the hardest, according to Worters, who said the group has significant reinsurance coverage, led by AXA XL. Worters also said it was her understanding that Aon PLC covers the bridges and tunnels property placement for the State of Maryland.

Claims complexity

Severity has yet to be determined, but the accident will affect several different lines of business.

Bridges are typically covered under the inland marine insurance market, Worters said. Liability insurance also protects bridge owners from legal claims arising from accidents and injuries.

Business interruption insurance could also be a factor as it also serves to offset loss of revenue or costs incurred during repair or reconstruction of the bridge, Worters said.

"This collapse is likely to cause huge disruption both for shipping ... as well as roads so there could be supply chain issues," said Worters.

Liability lawsuits are surely coming down the pike for losses stemming from injuries and fatalities.

"There is also clean up from the debris and reconstruction costs, which will be massive," Worters said.

There is not expected to be the huge environmental impact associated with, for instance, an oil tanker running aground. Britannia P&I Club said in its statement that no pollution had been associated with the incident.

The incident bears some similarity to the May 1980 collapse of the Sunshine Skyway Bridge in Tampa, Fla. In that incident, the M/V Summit Venture collided with one of the bridge's supports during a storm in Tampa Bay, sending a 1,200-foot section of the bridge into the bay below, killing 35 people.