It has been exactly 100 years since the pride of the White Star Line, the RMS Titanic, hit an iceberg in the Atlantic Ocean and sank with the loss of over 1,500 lives.
The centennial prompted many insurance companies on both sides of the Atlantic to release documents relating to the largest maritime loss to date in terms of relative costs, mainly showing the implication of their company in the settlement of claims.
When the Titanic sank on April 15, 1912, the Lutine Bell was rung at Lloyd & # 39; s London and a very rapid claims process was initiated.
Months earlier, the shipowners, the White Star Line, had asked insurance brokers Willis Faber and Co. to find coverage for the ship's hull, cargo, contents and personal effects. Willis Faber forwarded the 'slip' to their Lloyd & # 39; s business division, where it was assessed and then underwritten by several unions and underwriters acting on behalf of the members.
The Titanic's hull was insured for the total loss of $ 5million or just over £ 1million at the then exchange rate. The policy also provided for total loss insurance for freight at $ 600,000 and contents at $ 400,000, a value equivalent to two hundred thousand pounds.
The original brokerage slip passed around Lloyd & # 39; s has been lost, but has been photographed and can be seen in Wright and Fayles' 1928 book titled "A Lloyd & # 39; s Story". It shows that seven major insurance companies took almost forty percent of the risk between them and the remaining sixty percent was underwritten by over seventy people and Lloyd's "names".
According to documents recently released by Willis, the marine insurance policy was costing White Star £ 7,500 or $ 38,000 to insure the Titanic at a rate of 15 shillings per cent. Modern rates for cruise ships are considerably lower.
The vessel was significantly underinsured at a value of only five-eighths of its replacement cost. This was apparently because the owners believed the hull was unsinkable and were willing to shoulder the additional $ 3 million in risk on their own.
Willis states that although the owners believe the ship is unsinkable, they struggled to place all of the hull cover at Lloyd's and some forty thousand pounds were taken out in Germany. There was also an extremely high deductible or deductible of 15% of the insured value.
Four days after the sinking of the Titanic, the US Senate conducted a preliminary inquiry at the Waldorf Hotel in New York City. The surviving officers of the ship presented their evidence to the panel describing the events of the sinking and signed what is known as a 'protest' which pays for insurance claims.
Incredibly White Star was reimbursed for the loss of the hull within seven days of the sinking, arguably less the excess, and fully paid on the loss of cargo and contents within thirty days.
They were, however, seriously underinsured for their liability to others given the value of the people on board. Claims against the company exceeded their coverage by more than $ 1 million, and whether they had private P&I accident coverage for their personnel liability remains a mystery. Suffice to say, payments to the families of lost crew members were paltry.
Claims for loss of persons amounted to more than five times the value of the ship, for the lucky ones who had had life insurance or purchased personal accident insurance for travelers. While there was no dispute over the death, the families had to wait much longer than White Star for compensation.
The final payout for the loss of life has never been fully affirmed as over 150 different life insurance companies were involved in the coverage, on both sides of the Atlantic. American companies took the bulk of the claims, due to the many wealthy entrepreneurs and millionaire family members who drowned.
The total loss is estimated to be around $ 20 million and one of the largest payments was made by the Hartford Travelers Insurance Company, which paid off a life insurance policy. over a million dollars.
The sinking of the Titanic also resulted in the first and only insurance claim for a car hit by an iceberg, by a Mr. William Carter who claimed five thousand dollars for his 25 horsepower Renault, lost at sea.