Costa Concordia costs likely to hit $2bn - 09/07/2014

What remains of the ship is due to be towed to Genoa to be broken up. ©2014 Gregorio Borgia/AP

Cruiseship casualty set to prove twice as expensive as initial estimates

THE Costa Concordia casualty is likely to cost operator Costa Crociere over €1.5bn ($2bn), almost twice the initial estimate made in the immediate wake of the casualty in January 2012, according to its chief executive.

“So far, our costs are at €1bn. But that does not include €100m for the ship to be broken up for scrap and the cost of repairing damage to Giglio island,” Michael Thamm told German newspaper Bild am Sonntag.

Mr Thamm’s appraisal was echoed by Andrew Bardot, secretary of the International Group of P&I Clubs, who said in an email to Lloyd’s List: “On the overall amount of the claim, the hull and machinery and liability claims are approaching an amount of close to $2bn.”

What remains of the 290 m ship has been righted and secured and is due to be towed to Genoa to be broken up in the next couple of days.

Mr Thamm said Costa Crociere managed to retain 95% of its customers in the wake of the incident, which cost 32 lives, thanks in part to “significant” discounts.

Anything up to 60% of Costa Concordia’s surviving passengers have since taken another cruise with the company, he added.

When the cruiseship hit the rocks off the island of Giglio, estimates from the marine hull and protection and indemnity markets suggested that the casualty was likely to come in at somewhere between $500m and $1bn.

The Standard Club is the lead P&I insurer and has claims handling responsibility for Carnival, and is in a quota share arrangement with Steamship Mutual.

The two clubs share a retention of $8m — which was the limit prevailing in 2012 — and after that the passenger and third-party liability pay outs enter the International Group pooling scheme and ultimately the reinsurance market.

On the hull side, Aon acted the broker and XL leads the Lloyd’s slip for the €395m insured value hull cover with a 5% line.

RSA is the company market lead on the placement, which had significant support from Allianz and Axa as well as a smaller participation from Italian giant Generali and marine specialist Gard

in 08/07/2014