January 17th, 2012

Cruise Ship Grounding, Italy

Posted at 6:59 PM ET

giglio-smallAt least six people died after a luxury cruise ship carrying 4,229 passengers and crew ran aground off the Italian west coast on January 13 in calm weather conditions. Italian, Spanish, German, French, British and American nationals were reported to be among the 3,200 passengers on board the vessel. The 290-meter-long Costa Concordia was on a trip around the Mediterranean when it hit rocks near Isola del Giglio off the Tuscan coast, ripping a hole in its hull and prompting a major rescue operation. A large gash can be seen in the ship’s hull but officials said its fuel tanks did not appear to have been damaged, lessening the danger of an oil spill.

An investigation is underway to determine the cause of the crash. The captain of the ship has been detained on suspicion of manslaughter after the vessel’s owner Costa Crociere said in a statement that he appears to have made “errors of judgment” in sailing too close to land and not following the company’s emergency procedures. Captain Francesco Schettino denies any wrongdoing. Reports said the liner had passed all safety and technical tests in its 2011 evaluation.

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Hazard data illustrated in the CAT-i map was taken from i-aXs®, Guy Carpenter’s web-based risk management platform. i-aXs users can view impacted areas on any map as well as see how their portfolios were affected. Please contact your broker or GC Analytics (SM) representative for assistance or go to www.i-axs.info for further information.

Incident Details

The Costa Concordia, which reports said boasts 58 suites with balconies, five restaurants, 13 bars, five Jacuzzis and four swimming pools, had set off from the Civitavecchia port near Rome at around 19:00 local time before a loud bang was heard at around 21:45 as it approached Isola del Giglio. Reports said the ship started to list heavily as water poured in and the order to abandon ship was made at around 22:30.

Most of the 3,200 passengers and 1,000 crew members on board were evacuated, although delays in dispatching lifeboats meant some passengers swam to shore. Some passengers were airlifted to safety while others were forced to wait for rescue vessels. Reports say at least six people were killed and another 15 remain missing. Medical sources said around 60 people were injured, two of them seriously. Most survivors have now been taken by ferry from Isola del Giglio to Porta San Stefano on the mainland. The Costa Concordia is still lying on its side and Carnival Corporation, the parent company of Costa Crociere, said the vessel is expected to be out of service for the remainder of this year, if not longer.

Insurance Information

Carnival has confirmed it has insurance coverage for damage to the vessel, with a deductible of approximately USD30 million. It added its third-party personal injury liability was subject to an additional USD10 million deductible. Carnival said it self-insures for loss of use of the vessel, prompting the company to estimate the impact on its 2012 earnings to be between USD85 million and USD95 million.

According to industry sources, the Costa Concordia is insured for EUR405 million (USD513 million). Reports said XL Group leads the insurance cover while RSA Insurance and Generali also provide coverage. Hanover Re announced this morning it expects a damage claim of at least EUR10 million euros (USD12.7 million) from the incident. For potential injury claims, Standard Club said it was one of several P&I clubs providing cover for the Costa Concordia.

Sources: Associated Press, Reuters News, Agence France Presse, BBC News, Insurance Day, Bloomberg, The Independent

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Guy Carpenter publishes CAT-i reports for major natural catastrophes worldwide. These reports cover catastrophes including worldwide tropical cyclones, earthquakes, major UK and European floods and any other natural event that is likely to incur a significant loss to the (re)insurance industry. Please email CAT.i@guycarp.com if you wish to be added to the free email distribution list.

Guy Carpenter compiles RISK-i reports for major technological or man-made events worldwide. These reports cover risks to property, transport and life including explosions, fires, crashes, engineering disasters and terrorist attacks that are likely to incur a significant loss to the (re)insurance industry. Please email RISK.i@guycarp.com if you wish to be added to the free email distribution list.

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