Reports suggest that insured losses arising from the grounding and capsize of the Costa Concordia cruise ship off the west coast of Italy Friday night could make it the largest marine insurance loss in history.
So far, six are confirmed dead and 29 reported missing after the Costa Concordia, carrying over 4,000 passengers and crew, apparently deviated from its course and hit rocks near the island of Giglio. The ship is owned by Carnival Corp.
Concerns were growing yesterday that the shipÃ‚ could break up and cause an environmental disaster if some of its roughly 2,300 tonnes of fuel leak.
A Reuters report cites one industry analyst estimating the insured loss from the Costa Concordia at between $500 million and $1 billion. Meanwhile, Bloomberg News cites another analyst saying the insured lossÃ‚ could total as much as $800 million.Ã‚
Whatever the loss ultimately totals, global insurers and reinsurers will play a key role in covering claims related to the incident.Ã‚ A special report by Guy CarpenterÃ‚ has more on this.
In the world of marine insurance, damage to a vessel is typically covered by a hull and machinery policy, while marine liability insurance would cover property damage and injury to third parties at sea.
The Protection & Indemnity (P&I) market typically covers liability claims arising from large marine insurance claims.
The International Group of P&I Clubs comprises 13 mutual insurance associations (P&I clubs) that between them provide liability cover for approximately 90 percent of the worldÃ¢â‚¬â„¢s ocean-going tonnage.
Clubs cover a wide range of liabilities including personal injury to crew, passengers and others on board, cargo loss and damage, oil pollution, wreck removal and dock damage.
Under the GroupÃ¢â‚¬â„¢s pooling agreement by which the clubs reinsure each other, losses in excess of $8 million are shared between the clubs.
This claim-sharing agreement is underpinned by a very extensive market reinsurance program which the Group clubs arrange.
For more on this, check out the latest P&I market review from Willis.