In the aftermath of the Costa Concordia collision, a significant environmental disaster has been averted. Now that experts have determined that there is little risk of the heavily battered ocean liner sliding into deeper waters, the painstaking process of siphoning more than 500,000 gallons of fuel stored in the ship's 17 tanks can begin.

Meanwhile, both insurers and reinsurers brace themselves for losses that could ultimately surpass $1 billion, according to Moody's Investors Service. In a separate statement, made on Jan. 23, Hannover Re estimates that its marine hull insurance losses from the wreck will reach $39.1 million. Moody's further notes that insured losses from the accident will primarily stem from:

• Marine hull insurance covers damage to the vessel, with policy limits at an estimated $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.

John Woods, a partner at the New York City office of Clyde & Co., discusses in further detail the impact of the wreck on marine insurers' profits. Drawing upon his 31 years of experience representing largely marine insurance interests in both the U.S. and in London, Woods estimates the toll on the global industry will be heavy indeed.

"From what I understand, [the Costa Concordia] is insured at 264 million euros for the hull," Woods explains. "If the cost of raising and repairing the vessel exceeds that, then she would be declared a constructive total loss. In that case, the hull insurance would pay out both the maximum on the hull plus a separate increased value (IV) policy in the amount of 131 million euros."