Costa Concordia insurance claim bill to rise to £1.2bn

 

Jamie Dunkley
Saturday 28 December 2013 03:01
Comments

Claims from the Costa Concordia disaster are set to break through the $2bn (£1.2bn) barrier next year because of difficulties experts have faced salvaging the 114,500-ton liner, insurance experts warned today.

The ship capsized off the Italian island of Giglio while carrying 4,229 passengers in January last year, killing 32. Engineers have started removing the wreck, although it is anticipated to take several more months.

Insurers, including many in the Lloyd’s of London market, have so far paid out more than $1bn, although these costs are set to rise considerably. As well as insuring the ship’s hull, they are also on the hook for liability claims.

Carsten Scheffel, chief executive of Allianz Global Corporate & Specialty, said: “Due to the vessel grounding in an environmentally sensitive area the complexity of the wreck removal has added significantly to the costs. At the moment, the overall cost of the incident is in the order of $1.6bn, which may not be the final amount.

“This will be one of the biggest single marine insurance losses in history.

“Vessels are getting even larger, so insurers are having to consider potentially even higher costs should the largest container vessels or bulkers become total losses in areas where wreck removal would be required.”

David Croome-Johnson, underwriter at Aegis, said: “The increasing cost of removal of large wrecks, such as the Costa Concordia, is fuelled by environmental pressures being applied to politicians and local agencies and the ever-increasing size and scale of vessels and wrecks being removed.

“There has also been a lack of investment in the salvage industry, and fears abound that for the largest tankers and container vessels already at sea, the available equipment to remove them, if they were to sink, does not yet exist.”

In recent years marine insurers have been unable to raise rates because of over-capacity in the market.

Michael Kingston, partner at the law firm DWF Fishburns, says that insurers cannot keep exposing themselves to such large levels of liability. “If insurers cannot insure, trade cannot take place. The vast proportion of what we eat and buy, our cars and building materials, our tea and coffee, arrives on these enormous ships.

“In circumstances where salvage equipment is not in place for the ships being built because it is too costly for any one salvage company to have in place ‘just in case’, something has to give.

“Industry and government must work together and introduce a ‘pooling’ system where industry and society contribute to a fund to keep equipment on standby.

“The consequences of an enormous ship sinking with 18,500 containers in the English Channel would be immense.”

Register for free to continue reading

Registration is a free and easy way to support our truly independent journalism

By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists

Already have an account? sign in

By clicking ‘Register’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Join our new commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in