Costa Concordia ‘biggest ever marine loss’

The Costa Concordia cruise ship disaster will cost insurers between $500m and $1bn (£326m- £653m), making it “the largest ever marine loss”, according to Espirito Santo analyst Joy Ferneyhough.

The previous largest loss was the oil tanker Exxon Valdez in 1989, which cost insurers around $500m including pollution costs.

The total amount insurers pay for the Costa Concordia disaster will depend on the liability claims. Ferneyhough says the hull value is rumoured to be $500m and is expected to be a total loss. There will be removal of wreck charges and liability claims for the injured and dead passengers on top of this.

Despite the size of the loss, Ferneyhough expects it to be spread broadly across the insurance market, with no one insurer taking a big proportion of the loss. The lead insurers are XL, Generali and RSA and Ferneyhough expects them all to have only small retentions, having passed the rest on to their reinsurers.

“Generali has stated over the weekend that losses will be “very marginal” on a net basis and a press reported suggested under €10m of net loss for RSA. Therefore we expect much of the loss will fall into the reinsurance market with Lloyd’s and European names likely to be involved,” Ferneyhough said in a research note.

While Lloyd’s is a major marine market, Ferneyhough said that the syndicated nature of the market and the involvement of P&I clubs (marine mutual insurers) means she is not expecting large losses at any specific syndicates.