As the Italian courts consider a proposed plea deal from Costa Concordia Captain Francesco Schettino, and salvage crews engineer the removal of the ill-fated cruise ship, U.S. Ocean Marine insurers say the operation could cost as much as $2 billion.
The removal of the Costa Concordia, which ran aground in January 2012, falls under the removal of wrecks areas of the Protection & Indemnity Liability coverage markets, says Tom Guarnera, a Division Sr. Vice President of Marine & Energy for Tower Group, New York.
“Attempting to remove the wreck will employ salvers to go to site, work up an engineering plan and commence the actual removal,” Guarnera says. “So the meter is running.
Guarnera and his counterpart Jeff Kaufmann at Tower predict the Costa Concordia cleanup is going to cost more than $1 billion in claims—probably more like $1.5 billion to $2 billion—by the time it is recovered and broken up.
“Underwriters will have to increase premium terms across the board,” Guarnera says. “It's quite an engineering feat to lift it from its side.”
The salvage plan is to first upright the ship, then repair the damage and prepare it for towing; the Italian government refuses to have it broken up at the site, he says.
“It's a risky operation, agrees Kaufmann. “If they don't do it correctly it will slide down a pretty steep embankment.”
Salvage crews have been spending the last year and a half attempting to work up the engineering arrangements to right the vessel, patch it, and then tow it out, Guarnera says.
According to the Weather Channel, the cruise ship is slowly being crushed under its own weight as its rests on granite seabed off the Tuscan island of Giglio.
Nick Sloane, an engineer for U.S.-owned company Titan Salvage and the leader of the salvage operation, has said the Concordia has already compressed some 3 meters (10 feet) since it came to rest on its side. Some experts at the site are concerned the submerged side may be more damaged than previously thought.
Sloane has said engineering experts would have one chance to pull the ship upright and float it away to the mainland for demolition. The National Weather Service noted Sloane has already said the salvage job lost two months because of rough seas, which made it too dangerous for diving teams to work in the area.
Various news reports have Sloan estimating the salvage operation at €500 million, or about USD $656 million.
Schettino, 52, who was nicknamed “Captain Coward” and “Italy's most hated man” by the country's tabloids, is on trial in Grosseto, Italy for manslaughter and for abandoning the $570 million cruising vessel. The 951-foot (290-metre) Italian cruise ship crashed into rocks just off the island of Giglio during calm seas on the night of January 13, 2012. Schettino is accused of leaving the ship before its 4,229 occupants were safely evacuated; 32 people lost their lives in the disaster.
According to various news reports, Schettino on Wednesday requested a three year, five month jail sentence in the plea bargain in exchange for admitting responsibility for the disaster. He faces up to 20 years in prison if he is convicted.
In his defense, Schettino has said that the ship was at a near 90 degree angle and he fell off of it onto a lifeboat.
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