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National Underwriter Property & Casualty : As damages are assessed from the Dec. 14 crash of a 700-foot freighter into the Riverwalk mall on the Mississippi River in New Orleans, attention is focusing on the insurance coverage for the Liberian-registered vessel.
The freighter Bright Field tore away a 200-foot section of the mall's walkway, damaged 13-15 stores and several condos and partially collapsed a building containing the 125-room Hilton Hotel and a parking garage.
While no one was killed in the accident, more than 100 people were injured during a stampede on the Riverwalk as the freighter approached. There were no damage estimates at press time. The National Transportation Safety Board is holding hearings about the accident.
The ship was returning from La Place, La., where it had loaded 64,000 tons of corn bound for Asia--freight worth an estimated $2 million, sources said.
The ship is operated by the Hong Kong-based China Ocean Shipping Co. It was registered in Liberia, and insured though Liverpool-based West of England Mutual, a protection and indemnity club.
West of England representative Kenneth Norman said that if the shipping company is held liable, it will pay for the damage and then be reimbursed by the P-I club.
West of England has approximately $20 billion in reinsurance for claims such as this, though Mr. Norman stressed it was very unlikely that any payment would approach that figure.
"It will be a long time before we know what will happen," Mr. Norman said, adding that liability has not yet been determined and any payments will depend on the specific terms of the policy.
A representative from Lloyd's of London said they were trying to determine if any of their syndicates had hull insurance on the ship.
According to Robert Jumonville, a representative of the Port of New Orleans, the buildings are leased by a company called International River Center. That company subleases the mall to Rouse Riverwalk, part of Maryland-based Rouse Co., and the Hilton.
Mr. Jumonville said most of the leases of the stores have been traced back to the Hilton. However, he did not know details of that company's insurance. "Of course we hope and feel the ship's insurance will cover the damages," he said, adding that the Riverwalk "did not jump in front of that boat."
The Beverly Hills-based Hilton Corp. could not be reached at press time.
The account representative at the Port of New Orleans's broker, Aon Corp., was unwilling to release the name of the port's insurer. However, she said that the port could only be held liable for a small portion of any loss.
Steven Sachs, risk manager for Rouse, said he has been working with Columbia, Md.-based Industrial Risk Insurers to determine the extent of the damage and a plan of action. Rouse plans to reopen the mall as soon as possible, but, he said, "the priority is making sure the building is safe."
Mr. Sachs said the aftermath of the accident has been similar to what would follow a natural disaster, though the Riverwalk presents some different problems than other malls because of its long, narrow structure.
He said representatives from the Hilton, the port, the mall stores and their insurers have been meeting to plan the mall's repair and reopening. While insurers for those parties will initially fund the repairs, according to Mr. Sachs, he said they expect the shipping company will eventually bear most of the liability.
Rouse operates 72 malls, including South Street Seaport in New York and Boston's Faneuil Hall.
According to published reports, a pump on the freighter failed before the crash, activating a backup pump and an automated safety system that slowed down the ship. In an odd twist, that safety system may have contributed to the accident, because the reduced speed reportedly made the ship more difficult to navigate.
The American pilot, Ted Davisson, sounded alarms and dropped anchor after the freighter began to head towards the Riverwalk. He was piloting the foreign ship due to an American law stipulating that ships on the Mississippi must be piloted by a state-licensed pilot.
Reports of his testimony in the NTSB hearings suggest he had a communication problem with the Chinese-speaking crew.
[12-21-96 at 09:22 EST, Copyright 1996, The National Underwriter Company]
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