Workers have begun to clear the wreckage of the Francis Scott Key Bridge in Baltimore, which collapsed after a container ship struck one of its support pillars. The harbor clean-up is expected to cost hundreds of millions of dollars, and analysts told Reuters that “insured losses could total between $2 billion and $4 billion,” potentially making it the largest maritime insurance loss in history.
Questions are brewing over who will cover the cost of the Key Bridge disaster, with the Singaporean company that owns the container ship likely to push back on liability claims. But this certainly won’t be the first time insurance companies will have to open their checkbooks. Here are five of the largest insurance payouts in U.S. history.
1. Lehman Brothers — over $115B
No institution sums up the massive plunge of the 2008 economic crisis like Lehman Brothers, when the shuttered investment bank underwent what is believed to be the largest insurance payout in history. Amid the collapse of the global economy, Lehman Brothers filed for bankruptcy in 2008, and insurance began paying out thousands of customer claims. This continued for 14 years until 2022, when the Securities Investor Protection Corporation announced the “return of more than $115 billion to [Lehman Brothers] customers and creditors.” Most of this went back to former Lehman customers, who “received $106 billion, fully satisfying the 111,000 customer claims.”
2. 9/11 — $50B
The true fiscal cost of the 9/11 terrorist attacks may never be known — and for many, the physical and emotional toll of that day is impossible to quantify. However, in the immediate wake of the attacks, insurers had to try and place a value amount on each life lost, a painstaking task depicted in the 2021 film “Worth.” The average award for a death payout during 9/11 was $1.44 million, according to the Justice Department, while “personal injury awards ranged from $5 to $6.8 million.” In all, “insurance losses stemming from the 9/11 attacks totaled about $50 billion in 2021 dollars, including commercial liability and group life insurance claims,” the Insurance Information Institute (III) said.
3. Hurricane Katrina — $41.1B
Nearly 20 years on, parts of the Gulf Coast are still feeling the after-effects of Hurricane Katrina, which decimated New Orleans and the surrounding region. Not only did Katrina result in “enormous destruction and significant loss of life,” the National Weather Service said, but it also remains the “costliest hurricane to ever hit the United States,” responsible for around $108 billion in damage. Five years after the hurricane, the III released a report concluding that Katrina had “generated the largest single loss in the history of insurance [at the time] — $41.1 billion and more than 1.7 million claims — across six states. The majority of these payouts — 63% — occurred in Louisiana.
4. Hurricane Sandy — $36B
Like Katrina, Hurricane Sandy caused widespread devastation across the Eastern Seaboard in 2012, particularly damaging large portions of New York and New Jersey. The total insurance payout from the storm is estimated to be around $36 billion. Years after the storm made landfall, there were allegations of widespread fraud from private insurance companies connected to the disaster. This “prompted the nation’s flood insurance program to re-open the claims process for thousands of Superstorm Sandy victims,” said PBS Frontline. More than 1,600 homeowners sued for additional compensation, which led to “more than $240 million” in extra funds being awarded.
5. Tohoku earthquake and tsunami — $35B
The earthquake that struck Japan’s Tohoku region in 2011 is considered one of the most powerful ever recorded. The quake and subsequent tsunami led to nearly 20,000 deaths and billions of dollars in property damage — and this was all before the natural disaster led to the Fukushima nuclear accident. This caused the release of radioactive waste contaminating the region and resulting in even more insurance claims. In all, the earthquake and tsunami itself cost around $35 billion, and that “doesn’t include losses stemming from the crippled reactors at the Fukushima Daiichi nuclear power plant,” KBPS said — meaning that the true value of the insured payouts could be even higher.