When people came to the US, they started from the coasts and some moved inland, but most remain along the coasts. The jobs were on the coasts and many like the views of the sea. As cities grew ports grew and infrastructure to move goods and services grew along the way. Bridges in cities are important to move things efficiently as the bridge provides access companies located near to ensure the access. There were seemingly logical reasons why a city develops the way it did, but then something happens and the cry comes develop it back.

In an article by Sinead Cruise, Jonathan Saul, and Carolyn Cohn of Reuters, in late March a cargo ship hit one of the support systems of a bridge and the bridge collapsed. The bridge was the Francis Scott Key bridge in Baltimore, Maryland. The costs to insurance companies could be $4 billion.

The losses of several product lines including property, cargo, marine, liability, trade credit and contingent business interruption. Marcos Alvarez, managing director for global insurance ratings at Morningstar DBRS believes the number is between $2 and 4 billion.

Ship liability insurance, which covers marine environmental damage and injury is provided through protection and indemnity insurance known as P&I Clubs.

The International Group of P&I Clubs insures about 90% of the ocean-going tonnage and member P&I Clubs mutually reinsure each other by sharing claims above $10 million.

The group holds general excess of loss reinsurance cover up to the value of $3.1 billion. It is expected that 80 different reinsurers provided that cover to the ship’s insurers.

The first layer of insurance was provided by AXA XL according to Loretta Worters of the Insurance Information Institute. The company Aon was the insurance broker for the bridge with Chubb Insurance the lead underwriter.

To replace the bridge according to economic software analysis company IMPLAN is $600 million, likely to be paid by the US government.

The closing of the port for one month would see a total loss of $28 million for the state of Maryland. To replace the bridge would likely take a couple of years. The good news is the first ship went past the bridge and that is a good thing.

Linking to dividend paying stocks, for all disasters, both small and large, insurance companies have a reasonable idea of the financial costs. There is no reason why it should come as a surprise to anyone in a company. All companies should have contingency plans for the movement of goods and services and if they do not, you should look for alternatives to invest in.

There are more questions than answers, till the next time – to raising questions.