According to industry experts and analysts, the ruined Costa Concordia cruise liner may become the largest maritime insurance loss in history.
Early predictions are indicating that the mutual societies and insurers may find themselves losing $1 billion on the disaster in which the multistory liner which had been carrying more than 4,000 people (both crew and passengers) ran aground off the west coast of Italy, capsizing and injuring dozens of people while killing at least five.
There will be two primary issues to be faced in this catastrophe which involves the complex maritime insurance environment:
• The cruise company clubs which provide each other with personal injury insurance as well as coverage for environmental damage and shipwrecks
• The various insurance companies who have underwritten the actual ship.
The Costa Concordia carried $513 million (€405 million) in coverage from insurance companies such as RSA, XL, and Generali. A spokesperson for RSA indicated that the disaster will expose the company to less than €10 million, and a spokesperson for Generali indicated that there will be only a small impact on the company itself.
The Lloyd’s of London insurance market XL team has been concentrating on the tragedy since it first happened, but it has yet to produce any firm figures in terms of liability or cost issues.
The company itself has declined to release any comments. This is a challenging time, specifically for XL, as it had only just made its $220 million disaster loss for 2011 announcement less than a week before the ship capsized. According to Allianz, from Germany, it is also among the companies providing coverage for the ship, and stated that there will not be a rapid resolution.
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