The collapse of Baltimore’s Francis Scott Key Bridge was a rare but stark reminder of the vulnerabilities in infrastructure. One year later, the city is still recovering from the disaster, which claimed the lives of six construction workers.
For the insurance industry, the catastrophe also served as a wake-up call. Lloyd’s of London said the event would likely lead to the largest single marine insurance loss ever, with insured losses initially projected in the billions of dollars.
Darron Johnston (pictured), national public entity practice leader at Amwins, said the event led to significant changes in underwriting criteria. Insurers have responded with more scrutiny, reduced coverage limits, and a reluctance to take on excessive exposure.
One of the most immediate and significant changes has been the pullback of primary carriers. Johnston said a lead insurer on many major infrastructure programs has drastically slashed its limits.
“Before the collapse, this carrier was willing to take on significant portions of coverage, sometimes assuming 40-60% of a placement on a quota-share basis,” he told Insurance Business. “However, after the incident, they have reassessed their approach. Now, they are cutting back their limits—where they once provided $250 million in coverage, they may now only offer $100 million.”
Since the collapse, Johnston said, insurers have become more cautious, scrutinizing how public entities allocate budgets for infrastructure upkeep. Public entities are being asked to submit detailed financial planning documents, proving that funding for maintenance and repairs is not just allocated but consistently spent.
“It’s no longer enough to say you have a budget,” said Johnston. “They want to see the actual expenditures, the timelines, and the contracts.”
When a carrier that had been in the market for years, familiar with the risks and willing to offer competitive rates, scales back, new entrants typically charge higher premiums. This restructuring of programs has become increasingly common, according to Johnston.
“Instead of one company covering 100% of a policy, we now see multiple insurers stepping in, often leading to more expensive and complex arrangements,” he said.
Additionally, new insurers may impose stricter terms and conditions. They might require higher deductibles, lower catastrophe coverage limits (for earthquakes, floods, or named storms), or other restrictive terms.
Negotiating across multiple stakeholders adds layers of difficulty for brokers, requiring more extensive risk analysis and compliance with varied underwriting requirements.
For public entities responsible for critical infrastructure, this new reality also brings challenges. While Johnston believes risk management in the public entity space remains robust, the heightened requirements place additional burden on municipalities and agencies that may already be stretched thin.
“The risk manager responsible for putting everything forward may now need to go to the loss control team or the risk control team to get those reports,” Johnston said. “So, while it hasn’t necessarily changed the process itself, it has forced everyone to be more prepared.”
Amid a hard market, Johnston emphasized the importance of thorough submissions and transparent communication with clients to manage expectations and navigate the evolving market dynamics.
While some segments of the property market have shown signs of softening, infrastructure remains a tough sell. “We’re seeing more insurers stepping into the space, but they’re not rushing in with open checkbooks,” said Johnston. “They’re testing the waters cautiously, and that means pricing remains high.”
For brokers, the old model of securing broad, comprehensive coverage from a handful of carriers is no longer viable. Instead, they must find the right mix of insurers to achieve adequate limits while keeping costs in check for their clients.
“It’s a different game now. You have to build coverage in layers, and that means understanding each insurer’s risk appetite in a way that wasn’t necessary before,” said Johnston.
Beyond securing coverage, brokers also play a crucial role in managing client expectations. This means educating clients on the new realities of pricing, coverage limits, and underwriting requirements.
“A year ago, you could go to market expecting a $500 million policy with a single lead carrier taking on the bulk of the risk,” Johnston said. “That’s not happening anymore, and clients need to adjust.”
Are you a broker serving clients in the public entity sector? What challenges are you seeing in the market? Please share a comment below.
