Forty feared dead in tragedy

Half the people missing from the capsized cruiseship Costa Concordia are now accounted for but the death toll could still be around 40.

The number of passengers and crew missing from the vessel has fallen to 36 with three more confirmed dead but this is not the final toll as divers are continuing to search the vessel with surrounding waters also being scanned for survivors or victims.

The capsized Costa Concordia and below an aerial view of the activity around the wreck.

The master of the Costa Concordia, Francesco Schettino (52) who has been with Costa Cruises for 11 years and first mate, Ciro Ambrosio, have been detained by the Italian authorities with reports indicating they may be charged with multiple manslaughter and deserting their ship before all passengers had been evacuated.

There are also reports the vessel may have been up to four miles off course when it hit rocks near an island off Tuscany with a prosecuter quoted as saying the master "very ineptly got close to Giglio.”

But Capt Schettino’s lawyer Bruno Leporatti, denied the allegations saying “I'd like to say that several hundred people owed their life to the expertise that the master of the Costa Concordia showed during the emergency.”

The cause of the Costa Carnival’s grounding and subsequent capsize meanwhile remains a matter of speculation.

A fault with the vessel’s diesel electric propulsion system or with the steering remains the main area of suspicion as survivors report there was a power blackout about the time the vessel ran aground.

But an error of navigation or other human factors are other potential issues that could have led to the grounding of the Fincantieri built Rina classed vessel.

Costa director general, Gianni Onorato, said he was not able to answer questions about the “terrible tragedy” but the company was working with the competent authorities to ascertain the reasons for the incident.

Onorato said Capt Schettino was on the bridge at the time of the incident, realised the gravity of the situation immediately the vessel hit rocks and quickly triggered emergency procedures for the evacuation of the ship.

"Unfortunately this operation was complicated because of a sudden tilt of the ship," Onorato added.

The Costa Cruises vessel, which was on a Mediterranean cruise, had 4,234 people aboard, about 1,000 of whom were crew, at the time of the grounding.

Costa is one of the brands of Carnival Corp, the biggest of the cruise operators with a fleet of over 100 ships.

Despite Carnival Corp having a uniquely high deductible of $10m for each and every loss on its protection and indemnity cover it is already clear the Costa Concordia claim is going to going to be a very major one for the Standard and Steamship Mutuals clubs. The Standard Club is the claims lead with the risk shared with Steamship Mutual on a quota share basis.

Assuming even modest compensation levels if there are 40 dead with their families getting $250,000 each, maybe 50 significant injuries at $100,000 each and $10,000 a head for survivors one comes out with a “people” claim of $20m.

But if one works on the basis that the families of those lost get $500,000 each, bodily injury claims remain at $100,000 a head and survivors get $50,000 each the “people” element of the claim suddenly leaps to $225m making it by far the biggest ever passenger ship claim.

But the bill could be a lot higher if survivors make large trauma compensation claims.

Salvage and repair of the hull of the Costa Concordia is also going to be very expensive – maybe $50 or $100m – as it is not a cargo ship but a $600m floating hotel very vulnerable to water damage. The hull & machinery cover is led by the UK’s RSA insurance group.

Fortunately for the P&I clubs the claim comes just days after reinsurance arrangements for the policy year from 20 February were settled.

But the Costa Concordia disaster may have a significant impact on the new passenger compensation regime being introduced under the protocol to the Athens Convention which is due to take force in Europe from the end of this year.

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