The ship ran aground and capsized off the island of Giglio, Italy, on Jan. 13, resulting in the deaths of 13 passengers. Another 20 passengers are still missing, according to reports.

Hannover notes that the incident involving the cruise ship will result in a “major loss for the company,” adding that liability claims are difficult to assess at this time.

“The assumption is that a market loss running into triple-digit millions of euros could result,”Hannover says in a statement. “The total loss for Hannover Re—as a leading marine reinsurer—could therefore be in the mid-double-digit million euro range.”

Moody's notes that insured losses from the cruise ship accident are likely to arise from four factors:

• Marine hull insurance, which covers damage to the vessel, with coverage an industry-estimated €405 million ($513 million).
• Liability insurance claims from passengers.
• Costs associated with recovery of the wreck.
• Possible environmental liability claims related to any fuel spillage that occurs.

Since the marine-insurance market is widely syndicated, losses will be spread among primary insurers that write marine business, insurance syndicates operating at Lloyd's of London and global reinsurers, Moody's says.

The claims burden could fall more heavily on reinsurers, however, because primary insurers and Lloyd's syndicates generally carry significant reinsurance coverage on their marine hull and liability risks with relatively low deductibles.

A spokesperson for Lloyd's says it is too early to release a loss estimate.

Moody's adds that so far, only a couple of firms have publicly commented on potential exposure to the Costa Concordia loss, “offering only vague loss estimates given the uncertainty of potential liability claims.”

Moody's cites Munich Re, which states it expects to incur losses in the “mid-double–digit, million euro range,” and Hannover Re.

As for the removal of the wreckage, John Woods, a partner at the New York City office of Clyde & Co. said last week that the vessel's liability insurers would typically cover the associated expenses if the vessel is a total loss.

This is carried under protection and indemnity (P&I), a type of marine coverage that would cover liabilities such as passenger claims and pollution.

Woods expects that crew death and injured passenger claims will be significant but predicts they will be “dwarfed by the hull and wreck removal claims.”

Moody's concludes it expects Costa Concordia losses to be minor in the context of both core earnings power and capital for insurance and reinsurance companies. The earnings drag from this loss event, however, “will impede capital growth for affected firms and contribute to the perception among investors that the reinsurance sector cannot earn its cost of capital,” Moody's says.