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.