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Dali owner file petition to cap liability in Baltimore bridge collapse at $43.7M
- altacc 3y agoI have wondered what the insurance structure for this is and how liable the vessel's owners and insurers are for damage to public infrastructure. Marine insurance is one of the oldest types of insurance and antique in some respects, with large vessels covered by several underwriting firms. So potentially this is a massive financial hit for multiple companies if there is not a limit on liability.
- baq 3y agoIt's worse (as in, more complex; better for the public, I guess) in that damages will be so big reinsurers are going to take a huge hit; they're probably not used to that.
- Elkekec 3y agoThe exposure of insurance and reinsurance depends on the amount the ship was insured for (and there is a limit to that).
- mschuster91 3y ago> damages will be so big reinsurers are going to take a huge hit; they're probably not used to that. Nah, the re-insurances actually are used to big hits. Munich Re, one of the biggest in the world if not the biggest, pays out billions of dollars a year from nature disasters [1]. [1] https://de.statista.com/statistik/daten/studie/200297/umfrage/schaeden-aus-naturkatastrophen-der-munich-re-rueckversicherung-seit-2006/ https://de.statista.com/statistik/daten/studie/200297/umfrag...
- clem 3y agoIt's certainly been a massive financial hit to the greater Baltimore area, so that sounds appropriate. Insurance companies need to account for large shocks -- it's the whole reason their industry exists.
- jcarrano 3y agoThere are insurance companies that insure insurers. At each lever there are solvency requirements.
- nashashmi 3y agoRight. Base damage is covered by the first line insurer. The excess damage is covered by the backend insurer. Business is about managing loss. Nothing more. No further emotional support required.
- proteal 3y agoWhat you are describing is true, but there is a lot of nuance to how reinsurance plays out in large insurance policy towers. If you build a stack of insurance policies that work together to create a large single policy limit, you typically won't see reinsurance directly in that tower. If "Westchester Insurance Company" is anywhere on that tower as a carrier (whether first line, known more commonly as a primary insurer, or above that as an excess carrier), they will cut your check in the event of a claim. The money will come from their bank account, as will all the other affected carriers in claim. They are what you would consider a traditional insurance company. With that being said, Westchester may elect to purchase reinsurance to further reduce their risk. If they know the volatility of a policy is high or want to limit their potential losses, Westchester can buy a reinsurance policy to cover the long tail of their written policy. So if Westchester gets unlucky and has to pay into that long tail (ie an unforeseen mega catastrophe occurs and they are on the hook), they will then submit a claim to their reinsurance carrier who reimburses them on the backend. As a recipient of that policy payout, you will only ever see Westchester's names on the checks. Also, Westchester's parent company, Chubb, has a reinsurance treaty which basically helps protect them from any crazy one time loss. The reinsurance/retrocession market is fascinating! It truly is insurance policies all the way down.
- lotsofpulp 3y ago> It truly is insurance policies all the way down. The way it has always played out in my lifetime, it is just a few levels of insurance, and then future taxpayers. See Katrina, Sandy, 2008 financial crisis, 2020 pandemic, etc.
- proteal 3y agoAs a former property insurance broker whose clients had big claims ($100Mish) and worked around people who handled the real big claims ($1B+), I can't really tell you with any specificity of how this will play out. All I know is that it will be a huge mess, and the lawyers will argue in court for several years. Ultimately, someone will have to pay to rebuild the bridge. In the event of really big claims, it almost always end up being whoever has the deepest pockets. The process of discovery will list out who all the owners are and how much their policies cover this claim (whether intentionally or not!). As counterintuitive as this may sound, the insurance and reinsurance companies are actually pretty well equipped to handle this type of event. The underwriter(s) on the other side of policy will have to report the claim to their boss and the report will show they followed company guidelines. The boss can only shrug her shoulders and say "welp, can't be too mad because this is the business we are in." No one is particularly thrilled about paying the claim, but these situations are exactly why insurance was created. (For context, the "small" claims of $1M -> $10M hurt the most because they are the ones that throw off underwriter's models the most and cause the most unprofitability)
- cientifico 3y agoI can tell you how is going to play out. The people with less money for lawyers will be held liable. Normally the captain.
- rightbyte 3y agoThere was a pilot onboard, right? If I remember correctly they made the ship steer of course quite sharply. If the pilot dropped anchor and made the ship do that they might be in error.
- nradov 3y agoLegally speaking, the pilot is only present in an advisory capacity. The master is ultimately responsible for safe navigation. As for the anchor, you seem to misunderstand the basics of ship handling. https://youtu.be/qZbUXewlQDk?si=GBPMFyHPZGAF1v5z https://youtu.be/qZbUXewlQDk?si=GBPMFyHPZGAF1v5z
- unyttigfjelltol 3y agoThis isn't an insurance lawsuit. Interestingly, it's also not exclusively a ship owner petition. The petition also includes the ship manager. Another poster linked to a USC section protecting the ship owner on the basis of them not knowing anything that caused the loss. So that is what it is. Ok, but why would a ship manager also be able to benefit from such a limitation ? The USC section doesn't say anything about the manager, and unlike the owner, the manager was by definition an active participant in the casualty.
- _heimdall 3y agoPresumably the ship manager, and everyone else onboard, should only be liable if they did something wrong. If the vessel lost power and they followed all standard procedures, acting responsibly and simply couldn't avoid the collision, they did their jobs and shouldn't be financially or legally liable.
- shakahshakah 3y agoWhile I'm sure they'd love to "win" their petition outright, a major benefit of filing the partition is to force all future legal action through that single court system.
- LgWoodenBadger 3y agoI watched this video last night and found it enlightening. He covers the multiple levels of ownership of the vessel, liabilities, insurance, insurance clubs, pooled insurance, and reinsurance. https://www.youtube.com/watch?v=2Wim-_Q_59o https://www.youtube.com/watch?v=2Wim-_Q_59o From "What is Going on With Shipping?"
- anonu 3y agohttps://www.igpandi.org/reinsurance/ https://www.igpandi.org/reinsurance/ Look at the graphic at the bottom of that link. Basically, there are multiple levels of insurance in the P&I space (property and indemnity insurance common in marine insurance). Insurance companies purchase their own insurance, aka reinsurance. The levels of reinsurance can be multiple layers deep. Insurance companies form clubs to spread out the risk to multiple entities. This stuff will be tied up in claims and courts for years to come.
- gbil 3y agoI stopped reading at point 13 >13. The Casualty was not due to any fault, neglect, or want of care on the part of Petitioners, the Vessel, or any persons or entities for whose acts Petitioners may be responsible. This comes out of nowhere and they base everything on this statement! Amazing
- RandomBK 3y agoIt's a petition early on in the case, so it just needs to be based upon "information and belief". The fact-finding step of the multi-year process has yet to begin, but lawyers need to present the best plausible case possible at this stage.
- nashashmi 3y agoThere was no fault neglect or want of care. The engine failed. The ship was out of control. It was not bad maneuvering. It was not sleeping on the wheel. It was not want of care (it was piloted by a harbor pilot).
- moron4hire 3y agoWhy did the engine fail?
- martyvis 3y agoThat's what the NTSB investigators on board since the crash would be seeking to find out.
- noisy_boy 3y agoA bit premature to declare so, don't you think? What if it comes out that corners were cut regarding engine maintenance or something along those lines?
- gbil 3y agoexactly, is there already an official verdict sourcing from official investigation? I don't think so Furthermore, the engine is part of the vessel, if the verdict is that the engine failed then the vessel owner/insurance can claim any penalties(plus extras) from the engine manufacturer
- blackbear_ 3y agoPrivatize the profits and socialize the losses, here we go again.
- yieldcrv 3y agoYou know, you can do that too…. you exist in the same system
- SideQuark 3y agoThe profits are also socialized, in that a huge chunk of US people are hurt financially when the bridge goes down, illustrating how most of us benefit from having stable flow of goods and services. If you (and millions of others) did not benefit from having this bridge, then you (and millions of others) would not now have lower quality of life when it fails.
- blackbear_ 3y ago
- baq 3y agoSome helpful context: https://www.ft.com/content/c44306cc-6057-4ca3-923d-d67d096765f6 https://www.ft.com/content/c44306cc-6057-4ca3-923d-d67d09676...
- 1letterunixname 3y agohttps://archive.ph/SrJcf https://archive.ph/SrJcf
- deleted 3y ago[deleted]
- proteal 3y agoYes - this is great additional information. Here's some additional context around the article. Lloyd's of London is the original insurance company. They work in a syndicate structure, where the various other commercial insurance companies (think AIG, AXA XL, Starr, etc) all work together to share risks using their domestic balance sheets. I'm simplifying a lot here, but the insurance policies covering the various entities are stitched together like a quilt. No overlap and when assembled you're fully covered! For example, one insurance company may say they will cover the first $10M of a claim, another might share the next $10M of coverage with a few other companies, etc. They do this to limit their losses on a program. It's a lot more manageable to pay out only a small share of the claim than it is to pay the entire thing. By doing it like this, the brokers build out an insurance program for the covered entity that pulls in capital from across the globe in a very cost-effective way. It also has the added benefit of not stressing any one insurance company too badly. What Neal (Lloyd's boss) is saying is "hey guys, we know we are all hosed here. It's gonna be an easy billion, probably more. Just because you're only expected to pay claims above $100M, you're certainly going to have to pay out. Let's not be knobs and pay this claim quickly to get the port back on their feet again"
- edgineer 3y agoRebuild cost: $600m [0] I do hope We the People have zealous advocates. [0]https://news.sky.com/story/baltimore-trade-implications-from-francis-scott-key-bridge-collapse-as-rebuild-could-cost-600m-13102108 https://news.sky.com/story/baltimore-trade-implications-from...
- eastbound 3y agoI hope not. I was irresponsible to let ships pass a dozen times a day through a flimsy contraption that could collapse at the first nudge. This risk was unacceptable. Unacceptable! The people of Baltimore have benefited for years of a port facility literally downtown, which is practically the same thing as building houses in a flood zone. Should have never been permitted! I hope “We The People” accepts the responsibility for their actions!
- buster3000 3y agothe use of "flimsy contraption" and "first nudge" indicates your level of ignorance of the subject. https://www.omnicalculator.com/physics/kinetic-energy https://www.omnicalculator.com/physics/kinetic-energy https://en.wikipedia.org/wiki/MV_Dali#Description https://en.wikipedia.org/wiki/MV_Dali#Description "Description Dali is a Neopanamax container ship[7] with an overall length of 299.92 metres (984 ft), beam of 48.2 metres (158 ft 2 in), moulded depth of 24.8 metres (81 ft 4 in), and summer draft of 15.03 metres (49 ft 4 in). Her gross and net tonnages are 91,128 and 52,150, respectively, and her deadweight tonnage is 116,851 tonnes. Her container capacity is 9,971 twenty-foot equivalent units (TEU).[2][8] Dali is propelled by a single low-speed two-stroke crosshead diesel engine coupled to a fixed-pitch propeller. Her main engine, a 9-cylinder MAN-B&W 9S90ME-C9.2[9] unit manufactured by Hyundai Heavy Industries under license, is rated 41,480 kW (55,630 hp) at 82.5 rpm.[2] Her service speed is 22 knots (41 km/h; 25 mph).[5] For maneuvering in ports, Dali has a single 3,000 kW (4,000 hp) bow thruster. Electricity is generated onboard by two 3,840 kW (5,150 hp) and two 4,400 kW (5,900 hp) auxiliary diesel generators.[4] "
- KingMob 3y agoPretty sure they're being sarcastic.
- keepamovin 3y agoIt’s amazing that the captain of such a large vehicle has through the results of their choices the capability to do so much harm
- gnfargbl 3y agoI agree: we allow people to be in command of thousands of kilos of metal, moving at up to around 30m/s, with really quite minimal training.
- keepamovin 3y agoRight? and yet so much focus is put on the operators of US$60 million machines like an F-18 or even commercial aviation pilots… and yet, it seems like their capacity for harm — and, as an aside I’m not saying that it was any human error that caused this, — but the capacity for harm of these aviation operators is, to be honest — 9/11 notwithstanding OK OK bear with me — is, perhaps a little less than the operators of these pervasive ubiquitous Gigantus ships
- BytesAndGears 3y ago(For anyone who is reading this, I think the parent is referencing driving cars)
- keepamovin 3y agoI thought they meant ships
- idbehold 3y agoNow consider all the people driving around in their cars everyday.
- keepamovin 3y agoRight, but I think it would be quite the engineering challenge — or, ‘evil genius side quest’, whatever you wanna call it disturbingly — to cause $600 million worth of damage with a sedan car. Tho, YMMV, that’s just me.
- swores 3y agoTLDR of the logic behind that sum for anyone else who wondered like I did: They claim the ship's value before the crash as $90M, and that estimated costs for salvage and repairs to the ship are $19.5M and $28M respectively, leaving the value of the ship now at $42.5M (points 15-17 in the main document). They then add the value of pending freight ($1.17M): "Petitioners offer an Interim Stipulation of Value in the amount of $43,670,000 (i.e., sound value of the vessel plus pending freight less repair costs and salvage costs)." and mention that they'll file updated numbers once salvage and repair costs are confirmed rather than estimates. IANAL nor in the US, so I'm curious whether this is standard law to be able to limit your liability to the (post-crash) value of the ship and the only thing in question is how the numbers end up, or if it's a long-shot hope that the companies' lawyers figured they might as well try asking for in case a judge feels friendly?
- michaelt 3y ago> IANAL nor in the US, so I'm curious whether this is standard law to be able to limit your liability to the (post-crash) value of the ship 46 USC 30523: General limit of liability [1] "In General.-Except as provided in section 30524 of this title, the liability of the owner of a vessel for any claim, debt, or liability described in subsection (b) shall not exceed the value of the vessel and pending freight. [...] liabilities subject to limitation under subsection (a) are those arising from [...] any loss, damage, or injury by collision" Of course, this is kinda what limited liability is - even if the law didn't say that, the owners of a $90M ship could simply set up a limited company that just owned that one ship and had no other assets, and simply declare bankruptcy if liabilities exceeded the value of the ship. [1] https://uscode.house.gov/view.xhtml?hl=false&edition=prelim&req=granuleid%3AUSC-prelim-title46-section30523&num=0&saved=%7CZ3JhbnVsZWlkOlVTQy1wcmVsaW0tdGl0bGU0Ni1zZWN0aW9uMzA1MDE%3D%7C%7C%7C0%7Cfalse%7Cprelim https://uscode.house.gov/view.xhtml?hl=false&edition=prelim&...
- Timshel 3y agoI was wondering how isolated the ownership was and the NYT reports that Grace Ocean Pte Ltd own 55 ships (according to Equasis). So not as much as I expected.
- bilekas 3y agoThis is actually a really interesting case. Hear me out, a little bit of devil's advocate maybe.. If insurance company is forced to repay the whole cost of the rebuild, estimated it will cost lets say $600M. Tax payer is happy they're not paying via Federal taxes. But, shipping and logistics insurance companies start to ramp up their premiums and those fees are passed on to, eventually, the consumer over the long term, this could end up costing the tax payer more ? If the insurance company pays 40~M and the federal pay the rest.. The tax rates will not go up based on this 600M rebuild, and if they do, no goverment will want to keep those higher rates. I cannot say the same for a private insurance company not wanting to keep their fees high if they're being paid anyway.
- alangibson 3y agoSome form of this "but what about the consumer" argument is rolled out every time a corporation screws up. It's an incredibly effective way of deflecting responsibility by claiming to be acting in someone else's interest. My rebuttal is "moral hazard." Why should Boeing bother making planes that stay in the air if they can always count on a slap on the wrist and, in the worst case, a bailout.
- ericmay 3y agoAlso the market will only bear rate increases to an extent and so some of this cost will actually be eaten by the shipping industry and the insurance industry and result in lower profits.
- deleted 3y ago[deleted]
- molyss 3y agoI’ll play with you: It might not be such a bad thing to increase cost of trans-oceanic transportation. Right now we’re shipping stuff that makes little sense no to produce locally simply because (cost of overseas labor + cost of transportation) < (cost of domestic labor). I would suggest this is absurd both from an ecological and from a humane standpoint. Increasing the cost of transoceanic shipping might help flip the scales a little bit Alternatively, I’d suggest that the premiums might not increase that much. Cost of insurance would be (cost of a claimable event)*(probability of such event). I’d hope the latter tends towards zero, significantly reducing the product of the 2. We can also look at the potential impact of such a “new” policy on total insurance costs. Apparently, the Dali is able to transport 10k containers. And current shipping prices of $4,000 per container, that means that the cost of the trip alone is in the $40M range. If we take the lowest possible value of the goods, that’d be $40M and the arrival location. I’d argue that the probability of losing the vessel and its cargo is higher than that of hitting a bridge, especially if ports start deploying tugboats around their facilities
- ourmandave 3y agoApparently step 1 standard filing for cases like this. Law firm doing boring lawyer things. The Exxon Valdez took 26 years to finally litigate, so maybe check back in a couple decades.
- bluelightning2k 3y agoThere's a lot of excellent discussion in the comments on who should ultimately pay. One interesting aspect: if insurance gets too high, it incentivises corporations themselves to be the insurer. I mean the literal corporate limited liability. Would they not be incentivised to put each major asset into its own corporation, and in the event of a major loss that corporation becomes bankrupt?
- gruez 3y agoYou know what else has limited liability? People. A burger flipper making $30k/year can cause millions in damage by driving a car and crashing into a family of 4, sending them to hospital. The way we fix this is mandated insurance, so in the event something bad happens the insurance pays rather than having the family trying to collect a multi-million dollar judgement from someone with negative net worth. It's pretty easy to imagine cities/states/countries doing the same thing. If you want to sail into our waters, you need to carry insurance. I'd be surprised if that isn't already the case.
- Horffupolde 3y agoUp to the point where it’s considered criminal negligence by the executives.
- golemotron 3y agoI've never been about to figure out what the word should means.
- c0wb0yc0d3r 3y agoIt sounds like that is already the case. https://youtu.be/2Wim-_Q_59o?t=13m30s https://youtu.be/2Wim-_Q_59o?t=13m30s
- proteal 3y agoI'm not exactly sure how it all plays out, but if a company claims to not be able to pay, the lawyers will "pierce the corporate veil." Essentially they will ask for an ownership diagram and keep working their way up to the ultimate ownership entity. This trick doesn't work for real businesses, and only kinda works for fraudulent ones.
- 3seashells 3y ago[dead]
- mannykannot 3y agoHere's an interesting (IMHO) primer on marine insurance, from the What is Going On with Shipping channel: https://www.youtube.com/watch?v=2Wim-_Q_59o&t=618s https://www.youtube.com/watch?v=2Wim-_Q_59o&t=618s
- mattmaroon 3y agoI think the legal term for this is “Can’t Blame a Brother for Trying”
- ethagknight 3y agoIs there not some responsibility on the US govt to reasonably protect its infrastructure in a common maritime path? The harbor long preceded the bridge, and when the bridge was constructed, the harbor had massive container ships moving in and out. No dolphins or starlings around a single point of failure for an entire bridge span? Whole a bridge collapse like this is rare, bridge strikes are not uncommon. It seems like even modest defenses to slow the ship or push some energy aside could have mitigated a collapse.
- wombat-man 3y agoIt's a pretty huge ship. How do you stop it?
- willyt 3y agoIt's pretty shallow[0], looks like about 10m deep around the abutment that was hit; I would think that a big pile of rocks around the abutments that supported the piers on each side of the channel would do it. I just found out you call this RipRap[1] in the US which is cool, in Britain it's called Rock Armour. Total guess but a hundred meters in either direction parallel to the channel by 50 wide? That's about 100,000 tonnes of rock. Something like that? Something close to $50-$200 / tonne delivered? So range of $10m-$40m for both piers, so call it less than $100m. These are guesses which I am making from another continent! so probably the right order of magnitude but not much more accurate than that. I imagine it would have cost a lot less than $8bn dollars, 6 peoples lives and the indirect disruption to the US economy. With hindsight a suspension bridge or a cable stayed bridge with piers well away from the channel might have been more suitable. That style of structure is pretty old-school even for the 1970's, I wonder if it was designed like that because of ground conditions or something, or that was just the cheapest way of doing it in the US at that time and place? [0] https://webapp.navionics.com/?lang=en#boating@15&key=gqjnFz%7CarM https://webapp.navionics.com/?lang=en#boating@15&key=gqjnFz%... [1] https://en.wikipedia.org/wiki/Abutment https://en.wikipedia.org/wiki/Abutment Edit: Changed distribution to disruption.
- vr46 3y ago"I mean, how hard could it be?" It's an incredibly rare event. Retro-fitting things in the water is crazy expensive. Somebody estimated that the force hitting the bridge was 30 Million Pounds. That's a lot of protection needed.
- throw0101b 3y agoWhat is Going on With Shipping? has a good video on 'who pays': * https://www.youtube.com/watch?v=2Wim-_Q_59o&t=10m17s https://www.youtube.com/watch?v=2Wim-_Q_59o&t=10m17s TL; DR: it can get complicated. There is the owner of the vessel, the operator of the vessel, and the 'customer' of the vessel. An analogy used: when you have a delivery from Amazon, Amazon would be the 'customer' of the vessel, the delivery guy would be operator of the vessel, and he would have rented a vessel/vehicle from (e.g.) U-Haul. You would think that you'd sue the operator (delivery guy, and maybe the customer (Amazon)) if he wrecked your property, since he was driving it, but maritime insurance doesn't work that way: you sue the vessel owner (U-Haul). Then there's owner of the bridge (insured by Chubb), and then the re-insurance that Chubb has. Re-insurers are generally part of P&I clubs as well, so there's pooling of risk above the pooling of risk (which generally are activated in stages): * https://en.wikipedia.org/wiki/Protection_and_indemnity_insurance https://en.wikipedia.org/wiki/Protection_and_indemnity_insur... * https://www.youtube.com/watch?v=kpBOptxuDnk https://www.youtube.com/watch?v=kpBOptxuDnk Then there's force majeure: * https://www.handybulk.com/what-is-force-majeure-in-shipping/ https://www.handybulk.com/what-is-force-majeure-in-shipping/ * https://en.wikipedia.org/wiki/Force_majeure https://en.wikipedia.org/wiki/Force_majeure * https://www.bimco.org/news/contracts-and-clauses/20210216-who-is-responsible https://www.bimco.org/news/contracts-and-clauses/20210216-wh... See also general average: > The law of general average is a principle of maritime law whereby all stakeholders in a sea venture proportionately share any losses resulting from a voluntary sacrifice of part of the ship or cargo to save the whole in an emergency. For instance, should the crew jettison some cargo overboard to lighten the ship in a storm, the loss would be shared pro rata by both the carrier[2] and the cargo-owners. * https://en.wikipedia.org/wiki/General_average https://en.wikipedia.org/wiki/General_average
- sergius 3y agoWhy rebuild a bridge? Watch this and wee at the cost for a tunnel these folks managed to make: https://www.youtube.com/watch?v=EruSZNI4th4 https://www.youtube.com/watch?v=EruSZNI4th4
- alistairSH 3y agoA tunnel would be ideal here (and the other crossings are already buried). But I doubt it's in the budget.