Insured losses relating to the Costa Concordia disaster could tip USD1 billion (£650 million) once all related costs are taken into account, according to Moody’s.
The ratings agency said a plethora of claims types including environmental damage and personal injuries would push the total insured losses to extreme levels. Most of the burden will fall on reinsurance companies.
The shipwreck “marks the first major insured loss of 2012 and will result in a drag on first-quarter 2012 earnings for affected firms,” Bloomberg sited Moody’s Senior Credit Officer James Eck as saying.
The damage to the ship itself is expected to account for around half of the total losses, costing USD500 million, Moody’s said.
The disaster will effect each of the 28 insurers of the ship. Hannover Re revised its estimate yesterday, saying they expect losses of around EUR30 million (£26 million). Munich Re, the biggest reinsurer in the world, estimated losses “in the mid double-digit-million-euro range”.
Bloomberg reported yesterday that specialty insurer Lancashire Holdings will likely face between $20 million and $30 million in claims.
Despite the enormous losses expected across the insurance industry, Carnival Corporation, the company who owns the Costa Concordia, will be relatively OK. Moody’s said the company “has the ability to absorb the immediate financial impact of the accident,” and thus the incident hadn’t affected the credit rating of the company.
The ratings agency also said that the nature of the incident made it difficult to predict the effect on sales for the company.
“This incident is unique and unprecedented and so it is difficult to assess the impact on consumers’ perceptions of cruising as well as the ultimate financial liability to Carnival,” the company said.
The task of removing the ships 500,000 gallons of fuel will start today, weather permitting, and is expected to take almost a month.