Concordia Losses Could Be $1B for Industry; $39M for Hannover Re
While the cause of the Costa Concordia accident is still under investigation, insurance and reinsurance markets are bracing for loss claims that could ultimately reach $1 billion, according to Moody's Investors Service.
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In its Weekly Credit Outlook, Moody's says the wreck marks the first major insured loss of 2012.
In a separate statement, Hannover Re estimates that its losses from marine hull insurance from the wrecked Costa Concordia will be about €30 million ($39.1 million).
The ship ran aground and capsized off the island of Giglio, Italy, on Jan. 13, resulting in the deaths of 13 passengers. Another 20 passengers are still missing, according to reports.
Hannover notes that the incident involving the cruise ship will result in a "major loss for the company," adding that liability claims are difficult to assess at this time.
"The assumption is that a market loss running into triple-digit millions of euros could result,"Hannover says in a statement. "The total loss for Hannover Re-as a leading marine reinsurer-could therefore be in the mid-double-digit million euro range."
Moody's notes that insured losses from the cruise ship accident are likely to arise from four factors:
- Marine hull insurance, which covers damage to the vessel, with coverage an industry-estimated €405 million ($513 million).
- Liability insurance claims from passengers.
- Costs associated with recovery of the wreck.
- Possible environmental liability claims related to any fuel spillage that occurs.
Since the marine-insurance market is widely syndicated, losses will be spread among primary insurers that write marine business, insurance syndicates operating at Lloyd's of London and global reinsurers, Moody's says.
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