The Titanic, Insurance and 15 April

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Boarding the Titanic at Southampton dock on 10 April 1912 one of the passengers, watching the deckhands carrying up luggage asked them, “Is this ship really unsinkable?”

A deckhand replied: “Yes lady, God himself could not sink the ship”.

The Titanic sunk today 108 years ago on 15 April 1912 at 02h20.

The previous evening at 22h40 the Titanic collided with an iceberg.  On 15 April at 00h05 orders were given to uncover the lifeboats and muster the crew and passengers.

The Lutine Bell which still hangs in Lloyd’s today was used to inform the market when a ship arrived safely at the port or to confirm when it was lost. The bell was rung on the afternoon of 15 April to announce the loss of the Titanic. All trading ceased. The Titanic sinking constituted one of the Lloyd’s Market’s biggest ever losses.

At about 08h50 on 15 April the ship the Carpathia having picked up all the lifeboats and passengers that had made it off the Titanic headed for New York with 705 survivors. Of the 2024 people on board 1503 died. The lifeboats could only carry 1178 people. Many lifeboats left the Titanic carrying less than half their capacity.

Many myths and stories abound about the sinking of the Titanic, the largest and most luxurious ship of its time. That includes the story that a number of male first-class passengers boarded lifeboats dressed as women. And there is much debate as to what was the last tune the brave band played as the Titanic went under. The legend is “Nearer My God to Thee”. Many survivors insist that was the case. Others say the band only played ragtime. A more credible witness, the junior wireless operator, a trained observer, meticulously accurate and onboard until the last, clearly recalled that as the deck flooded the band was playing the Episcopal hymn “Autumn”.

The Titanic had been insured through Lloyd’s by the broker Willis Faber & Co (now Willis Towers Watson) on 9 January 1912 together with its sister ship the Olympic on behalf of the White Star Line.

The cover was for twelve months on hull and machinery with a value of one million pounds, free from all average under £150 000 with insurers to pay only on damage in excess of that sum and only in the event of a total loss.

Twelve companies and more than 50 Lloyd’s syndicates participated in the risk. At the time it was the largest marine risk ever amounting to about 20% of the total five million pound capacity of Lloyd’s market. The first signature appearing on the underwriting slip was on behalf of Commercial Union agreeing to accept up to £75 000 each on the hull and machinery of both the Titanic and the Olympic. That was the highest share of risk accepted on the vessels matched only by three of the other underwriters who signed the slip.

Willis succeeded in securing the prestigious and “unsinkable” risk at a very favourable premium of £7 500. While insurance for the Titanic was easily obtained, one underwriter declined to sign the slip on the basis that the Titanic “sat too low in the water”.

Visitors to Lloyd’s in London can view the original insurance slip.

With the benefit of the new wireless telegraphy news of the collision was quickly sent around the world although for about two days there was great confusion regarding what had occurred. Some newspapers‘ early editions reported that the Titanic had survived.

Much of the risk taken by the initial underwriters was reinsured. For example, the Commercial Union’s casualty book records that £43 450 of their cover was reinsured.

On receiving news of the collision Lloyd’s underwriters sought “overdue insurance”, reinsurance then commonly purchased after a marine incident. That followed a message that the Titanic was safe and was being towed to Halifax, Nova Scotia. “Overdue insurance” allowed insurers to sell on their liability if uncertain news was received about a ship.

The Titanic sinking constituted one of the Lloyd’s Market’s biggest ever losses. The White Star Line was paid its claim in full within thirty days of the ship sinking.

There were of course lives and assets insured. The pay-out of $50 000 to the wife of a prominent Philadelphian businessman was the largest of its time. Incidentally, she died on the same date, 15 April, thirty-two years later. The life cover sums were significant but most were covered by American Life Insurance firms and not Lloyd’s.

William Ernest Carter’s Renault was on board. He survived, it didn’t, and he was paid $5 000 for the vehicle. It’s probably the one and only insurance claim paid for a vehicle damaged following a collision with an iceberg.

The survivors and families of the victims claimed from the White Star Line for loss of life, property and injuries sustained. In October 1912 the Oceanic Steam Navigation Company (commonly known as the White Star Line) filed a petition in the United States to limit its liability against such claims in the United States. Liability was limited under American law where the collision was due to “inevitable accident”. The limitation could be avoided if it could be proved that the captain and crew of the ship were negligent and that the ship’s owners had knowledge of that fact.

That case ultimately dealt with hundreds of claims totalling more than sixteen million dollars, alleging that despite the crew having received wireless messages about the presence of icebergs the Titanic had maintained its speed, stayed on the same course, posted no additional lookouts and failed to provide lookouts with binoculars. It was also alleged that the White Star Line had not properly trained the crew for evacuation leading to the launching of partially filled lifeboats. Harrowing evidence was led by some fifty survivors.

Ultimately a settlement was concluded for about $646 000 to be divided amongst all the claimants.

The court in its final decree held the White Star Line guiltless of any knowledge and not liable for any loss, damage, injury, destruction or fatalities.

As the world struggles with the greatest pandemic seen for many generations, pause and remember the victims of the Titanic, who in their last moments may have heard across the icy Atlantic the strains of “Autumn”.

Article courtesy of COVER