It is 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 1500 lives.
The centenary has prompted many insurance companies on both sides of the Atlantic to publish documents relating to the greatest maritime loss to date in relative costs, mostly showing their company involvement with claims payouts.
When the Titanic sank on the 15th of April 1912, the Lutine Bell was rung at Lloyd's of London, and a very rapid claims process was begun.
A few months earlier the ships owners, the White Star Line, had instructed insurance brokers Willis Faber and Co. to find cover for the hull, cargo, contents and personal effects of the ship. Willis Faber passed the 'slip' to their Lloyd's mercantile division where it was assessed and subsequently underwritten by multiple syndicates and insurance underwriters acting on behalf of members.
The Titanic's hull was insured for total loss for $ 5 million or just over one million pounds sterling at the exchange rate of the time. The policy also included total loss cover for cargo at $ 600,000 and contents at $ 400,000 a value equivalent to two hundred thousand pounds.
The original broking slip passed around Lloyd's has been lost, but was photographed and can be seen in Wright and Fayles book of 1928 called 'A history of Lloyd's'. It shows that seven large insurance companies took nearly forty percent of the risk between them and the other sixty percent was underwritten by over seventy individuals and Lloyd's 'Names'.
According to documents recently released by Willis the marine insurance policy cost White Star £ 7500 or $ 38,000 to insure the Titanic at a rate of 15 shillings per hundred. Modern day rates for cruise liners are considerably lower.
The Ship was considerably underinsured for a value of only five-eighths of its replacement cost. This was apparently because the owners thought the hull to be unsinkable and were prepared to bear the additional $ 3 million dollars of risk themselves.
Willis state that despite the owners belief in the vessel being unsinkable, they had trouble placing all the hull cover at Lloyd's and some forty thousand pounds was underwritten in Germany. There was also an extremely high excess or deductible of 15% of the insured value.
Four days after the Titanic sank the US senate held a preliminary investigation at the Waldorf Hotel in New York. The surviving officers of the ship presented their evidence to the panel describing the events of the sinking and signed what is called a 'protest' which enable insurance claims to be paid.
Incredibly White Star were reimbursed for the loss of the hull within seven days of the sinking, presumably minus the excess, and fully paid up on cargo and contents losses within thirty days.
They were however grossly underinsured for their liability to others given the value of the people on board. Claims against the company exceeded …