Concordia disaster ‘unlikely’ to affect local insurance premiums

If the grounded cruise ship,
the MS Costa Concordia,
owned and operated by
American-British company,
Costa Cruises, is finally
declared a total loss, she is
expected to cost her insurers
hundreds of millions of US
dollars.
But according to Dave
Keeling, joint MD of
insurance underwriters
UMS, and a committee
member of the Association of
Marine Underwriters of SA
(Amusa), the SA insurance
industry is unlikely to suffer,
and local premiums should
be unaffected.
“It shouldn’t impact on our
local market,” he told FTW,
“as we don’t get involved in
those sorts of risks. Although
I believe she was partly
self-insured, any outside
underwriters are most likely
to be in London.”
While it’s too early to tell
exactly how much insurance
firms will have to pay out to
cover the damage to the ship
and loss of life, analysts have
estimated that claims could
total at least US$500 million.
One went as far as saying the
total bill for insurers could
reach US$1 billion.
However, Numis analyst
Nicholas Johnson was quoted
in the international press
as saying: “We would be
surprised if any single player
had more than 5-10% of the
risk.”
Nonetheless, it has been an
ultra-expensive grounding.
On January 13 the Costa
Concordia hit a rock which
tore a 160-foot-long hole in
her hull, and eventually she
capsized in shallow water in
the Tyrrhenian Sea just off
the shore of Isola del Giglio,
near the western coast of
Italy.
She is currently lying
on her side in an unsteady
position on a rocky
underwater ledge with most
of her structure above water,
and in danger of sinking
into a 70-metre-deep trough.
Although Dutch-based
salvors, Smit Marine, are
still busy trying to salvage
the ship, insurance industry
experts believe that she may
be a constructive total loss.
And there was possibly
an element of fate behind
the grounding of the
mighty vessel. She had an
inauspicious launch at Sestri
Ponente in 2005, when the
champagne bottle failed
to break.