Insurers’ £1.2bn bill for Costa Concordia: Salvage contractors set to refloat stricken cruise ship in next two weeks

Insurers’ £1.2bn bill for Costa Concordia: Salvage contractors set to refloat stricken cruise ship in next two weeks

Salvage contractors are set to refloat the stricken cruise ship Costa Concordia within the next two weeks in the latest stage of what has become the most expensive ship recovery operation in history.

London insurers picking up the $2 billion (£1.18 billion) bill will be closely tracking the moves to float the ship.

Insurance sources said the salvage could involve a semi-submersible boat effectively carrying the Costa Concordia to nearby Genoa to be dismantled.

Insurers’ £1.2bn bill for Costa Concordia: Salvage contractors set to refloat stricken cruise ship in next two weeks Mail Online

(Re)insurers waiting on fresh Costa Concordia creep

The (re)insurers of the Costa Concordia are awaiting loss advice showing a further deterioration on a total claims burden that already stands at more than $1.6bn, after the removal of the wreck was delayed.

Underwriting sources said that they had heard nothing to date from broker Miller, but expected that an increase in the loss was only a matter of time as the cost of salvaging the cruise liner rises.

(Re)insurers waiting on fresh Costa Concordia creep Insurance insider

The rising cost of shipwreck removal

Due to increasing vessel sizes and growing cargo volumes, the cost of removing shipwrecks, such as the stricken Costa Concordia, is spiralling, marine experts warn, according to Lloyd’s, the world’s specialist insurance market.

Shipwrecks are often a massive media event, frequently combining reports of heroism on the high seas with dramatic scenes of stricken vessels spilling their cargoes. But after the TV crews have moved on, the essential and sometimes dangerous work of wreck removal gets underway. And, as a new report from Lloyd’s reveals, the cost of this complex job is rising fast – with insurers and reinsurers, and ultimately shipowners, having to foot the bill.

The wreck of the Costa Concordia cruise ship, which spectacularly ran aground off the coast of Italy last year, has highlighted the issue of rising wreck removal costs. It has already cost significant sums of money and the wreck has not even been moved yet.

The bill for removing the wreck of the MV Rena, a container ship which sank off New Zealand in 2011, currently stands at $240 million. The removal of the MSC Napoli, which attracted thousands of scavengers to the UK’s south coast in 2007, took two and a half years to complete and cost $135 million, according to Lloyd’s.

The Rising Cost of Shipwreck Removal Financial

Costa Concordia insurance claim bill to rise

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.

Costa Concordia insurance claim bill to rise The Independent

Marine insurers need to adapt to thrive

Given the events of 2012, the choice of ‘Marine Insurance – building resilience and defining a sustainable future’ as the common theme for the IUMI annual conference could not have been more apt.

The Costa Concordia was the biggest single casualty loss in history for the marine insurance market and Superstorm Sandy at an estimated cost of $2bn to $2.5bn delivered the biggest combined event loss ever for marine underwriters industry. However, the insurance market has shown its resilience to deal with these losses but the market has to look to the future and the changing needs of its clients.

Marine insurers need to adapt to thrive

Ro-Pax Ferries Bear Excessive Reinsurance Burden Says Broker

Insurance broker and Maritime London member Willis believes that ro-pax ferries are bearing an unfair share of costs allocated to passenger ships within the International Group of P&I Clubs’ reinsurance pool.

The broker’s head of global P&I, Ben Abraham, told delegates at the recent Interferry annual conference in Malta that there was a compelling argument to differentiate between pure passenger ships and ro-pax ferries, where most carrying capacity is taken up by freight, because their catastrophe risk is so different.

Ro-Pax Ferries Bear Excessive Reinsurance Burden Says Broker Marine Link

Reinsurers demand greater decision-making powers

Munich Re is calling for reinsurers to have more say in decisions relating to marine salvage and wreck-removal operations against the backdrop of increased politicisation and escalating costs surrounding the Costa Concordia cruise liner wreck.

Dieter Berg, Munich Re senior executive manager for marine, said: “In the recent past, political considerations resulting in disproportionate operational requirements have developed into the key drivers for escalating wreck-removal expenditure. “We are troubled by the fact that, although reinsurers have to pay the lion’s share of the costs, they are hardly involved in the decision-making process for the salvage operation. We would like to have a say in the measures that need to be taken.”

Reinsurers demand greater decision-making powers as wreck removal costs soar

Costa Concordia loss estimates soar

The spiralling wreck removal costs for the Costa Concordia prompted many (re)insurers to increase their loss estimates for the disaster in the second quarter. International marine reinsurers have voiced concern over the potential for further deterioration in the vast $900mn removal of wreck element of the $1.14bn protection and indemnity bill for the Costa Concordia, with completion now delayed until spring 2014. The total loss tally for the marine disaster – which includes the $500mn paid loss . . . .

Q2 Costa Concordia loss estimates soar amid fears of wreck

Costa Concordia removal to cost $1.1bn

The loss for the stricken ship Costa Concordia continues to grow with Munich Re revealing removal costs for the wreck are likely to exceed $1.1bn.
The salvage operation aims to remove the vessel intact rather than cutting it into pieces, adding to the cost and time involved in removing the wreck.
Commenting as it released its interim results on Tuesday, Munich Re raised the estimate for its own share of the burden to €100m from its previous estimate of €80m.

Costa Concordia removal to cost $1.1bn Insurance Insight
Insurance payout for Costa Concordia disaster may top $1.1 billion Business Insurance

The Costa Concordia’s Insurer Will Pay Over $1 Billion

Insurance industry payouts related to last year’s sinking of cruise liner Costa Concordia have continued to rise and are likely to top $1.1 billion as salvaging of the wreck continues, reinsurer Munich Re said on Tuesday. Last year the ship struck a rock as it sailed close to the picturesque island of Giglio, prompting a chaotic evacuation of more than 4,000 passengers and crew. The ship had a value of $500 million, Munich Re said. “That’s already been paid for,” Munich Re board member Torsten Jeworrek told a news conference on the reinsurer’s second-quarter earnings.

The Costa Concordia’s Insurer Will Pay Over $1 Billion Skift Travel
Costa Concordia recovery set to leave insurers with £700m bill – See more at: City A.m.
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Insurer Payout for Costa Concordia Disaster Rising Maritime Executive