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Old 08-09-2013, 16:40   #31
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Re: 2013 Insurance Premiums

I'm impressed that some one's insurance actually went down in price after yeras with no major issues. Mine went up 50% after Ike and Katrina, but never went back down. They've been slowly creeping up at about 2% a year, but I expect after Sandy and Irene we're in for another huge increase, but I seriously doubt they will ever go back down. I bet those guys sailing on a lake in Kansas are wondering why they drew the line at the Rockies. The other issue for a lot of boaters is that they have a loan on their boat which requires full coverage.
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Old 08-09-2013, 18:20   #32
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Re: 2013 Insurance Premiums

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Originally Posted by Pau Hana View Post
Whether or not an insuring company chooses to increase rates in a given area (based on losses) is strictly up to that company.
No doubt. But is it based on real risk, or simply the company's desire to recover losses and return to profitable status. Since the system is fairly opaque to us, the users and payers, it's hard know.

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At the same time, the companies are well aware that the days of remaining with 1 carrier for years on end is over, and clients are always shopping their premium to ensure they are getting the best combination of premium and coverage. It's much less expensive for a company to retain clients vice attract new ones...
Interesting... I'd like to see the attrition, or rate of transfer each year. Given the PITA factor, I bet it's actually very small. But perhaps you have those numbers.

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On the liability only coverage- as a vessel owner, you are responsible for the damages you can cause to others- hence the Protection and Indemnity (liability) coverage. You are also responsible fur any fuel related spill coming from your boat, as well as wreckage removal if the boat sinks and is recoverable. These coverages typically are not included in a liability only policy. These are coverages that are paid "in addition to" any liability payments made on your behalf.
Right... And how often do these events occur, or result in payable damages. Since risk is proportional () to the likelihood of an event occurring x impact of an event, based on the actual data around boat accidents, the real risk seems to be quite low. But perhaps you can provide more accurate data.
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Old 08-09-2013, 18:34   #33
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Re: 2013 Insurance Premiums

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Right... And how often do these events occur, or result in payable damages. Since risk is proportional () to the likelihood of an event occurring x impact of an event, based on the actual data around boat accidents, the real risk seems to be quite low. But perhaps you can provide more accurate data.
On the insurer's side, risk is calculated by actuarials. On the purchaser's side, risk is measured by comfort level.

Therein lies the profit.

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Old 08-09-2013, 19:01   #34
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Re: 2013 Insurance Premiums

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On the insurer's side, risk is calculated by actuarials. On the purchaser's side, risk is measured by comfort level.
Agreed. The insurance companies KNOW the actual risk, and place their bets accordingly. Purchasers go on emotions promoted, in part, by insurance companies. Look at any insurance ad. Are they providing measured and balanced information to allow the buyer to make rational decisions? Or are they showing sad people, images of accidents, hurricanes and tragedy? Oh, and lots of plaintive childrens' faces...

I'm all for rational risk assessment, and pooled risk when that makes sense. This is what insurance started out to be. If it were run not-for-profit then it's great. As a for-profit enterprise, especially one forced on users by law or cultural practice, it is distorted into one that more dominantly serves the companies and the shareholders, not the purchases. That's why our insurance prices rarely goes down.
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Old 08-09-2013, 22:02   #35
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Re: 2013 Insurance Premiums

Mike, as I'm a broker/agent, I don't have access to actuarial tables. I base my statement on watching the renewals of our client base from 2007 to present, as well as the percentage of new policies to lost policies (lost due to sale of the vessel, transfer of the coverage to another agency).

The numbers show that in late 2008 (right when boat sales went into the toilet) we saw a shift of seeing renewals come in at $0 increase- a few at first, then more thru 2009 and 2010. We also saw a greater than average request for cancellations because the insured consolidated his vessel policy with his other insurances, or had gone with another carrier, where price was the deciding factor.

Thru 2010, and into 2012, as the surplus inventory was blown out at fire sale prices, we saw an solid uptick in the number of policies written- but the average premium was lower than expected based on previous years.

On the liability coverage- yes, the real world probability of a marine calamity occurring is low proportional to the overall number of boats insured, and diminishes further when you factor in the amount that boats are actually used. But, losses occur. Fur years, I've done seminars about marine insurance, and one of the things I mention is that people think a loss will never happen to them. In December of 2011, 2 Bayliner motoryachts burned and were destroyed in Edmonds, WA. On January 31, 2012, a 40' sailboat exploded (propane) in Sequim, WA- 1 fatality and multiple boats damaged heavily by shrapnel. On March 30, 2013, a liveaboard couple were killed when their boat was engulfed by fire.

The insurance companies involved paid the liability claims, pollution damages and wreck removal costs, in addition to the agreed value of the vessels. The 2 we were involved in had pollution and wreck removal payments in the 6 figures.

Moral- losses can happen. Does one have that type of liquid capitol available to pay such losses? Most don't. Marine insurance is cheap when compared to the potential of paying out of pocket for losses.
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Old 09-09-2013, 05:45   #36
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Re: 2013 Insurance Premiums

I suspect the insurance companies have CHOOSEN to use HUGE compartments so that most boaters feel some pain but not overwhelming pain.

If every boater east of the Rockies gets a 50% rate increase, they grumble but as long as the insurance companies all follow a similar patter, there is little those in the midwest can do about it. The alternative might be quadrupaling the cost of insurance in hurricane prone areas which will drive many out of boating all together.

Since insurance is heavily regulated, they are fairly limited on simply raising thier profit margin relative to claims payouts. Ironically, the best way to increase profits is to increase payouts (long term, a major storm is a short term setback). They can't openly state this but the last thing they want to do is kill off a popular and wealthy boat area that has substantial loss risk.

Because its a heavily regulated buisness with a relatively small number of players, market forces that would otherwise step in and quickly undercut someone overcharging in the midwest have difficulty breaking in.
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Old 09-09-2013, 06:44   #37
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Originally Posted by valhalla360 View Post
I suspect the insurance companies have CHOOSEN to use HUGE compartments so that most boaters feel some pain but not overwhelming pain.
I read somewhere that Sandy coupled with low fresh water lakes caused across the board increases in claims across the eastern 2/3 of the US. Some underwriters got out of the boat market altogether as a result.
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Old 09-09-2013, 06:57   #38
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Re: 2013 Insurance Premiums

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Originally Posted by Pau Hana View Post
The numbers show that in late 2008 (right when boat sales went into the toilet) we saw a shift of seeing renewals come in at $0 increase- a few at first, then more thru 2009 and 2010. We also saw a greater than average request for cancellations because the insured consolidated his vessel policy with his other insurances, or had gone with another carrier, where price was the deciding factor.
Given what was happening with the economy it's hard to see any other outcome.

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On the liability coverage- yes, the real world probability of a marine calamity occurring is low proportional to the overall number of boats insured, and diminishes further when you factor in the amount that boats are actually used.
THERE! Full stop. That's the real point. The probability of an incident is low, and the probability of a significant event where there are major costs are exceedingly low (just look at publicly available accident rates). Therefore the real Risk is very low for most boaters. For clarity, I state again:

RiskProbability of an event X Impact of the event.

If either factor is small (or tiny, in this case) then the Risk is tiny. Citing aberrations, or single disastrous events only serves to obfuscates the real Risk rate.

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Moral- losses can happen. Does one have that type of liquid capitol available to pay such losses? Most don't. Marine insurance is cheap when compared to the potential of paying out of pocket for losses.
Not to pick on you Pau Hana, but this statement is exactly the issue I chafe against. Yes, of course, if that is the comparison then it's a no-brainer. But that's an artificial construct designed to scare people into making irrational choices. You're only looking at one factor in the Risk equation, and ignoring the other. The real image of boating is happy faces, and safe, secure boats. But it's not in the financial interest of the insurance industry to promote reality.

BTW, I'm not saying you, or indeed anyone in the business, is actively seeking to scare people just to increase insurance profits. The fact that insurance is a for-profit business, and one where the purchaser has fewer and fewer options, drives this outcome.
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Old 09-09-2013, 07:07   #39
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Re: 2013 Insurance Premiums

here i am only required to hold 50k usd liability and prove that insurance with a paper in hand... the price is capped by govt, as are many other prices capped here including pulmonia rides in mazatlan, fuel prices at the pump--so there is no daily fluctuation of fuel prices--marina fees are capped at 68 cents per foot per day in high season fro boats under 50 ft.....
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Old 09-09-2013, 07:28   #40
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Re: 2013 Insurance Premiums

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I read somewhere that Sandy coupled with low fresh water lakes caused across the board increases in claims across the eastern 2/3 of the US. Some underwriters got out of the boat market altogether as a result.
No way low lake levels caused a 50% increase in claims.
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Old 09-09-2013, 07:58   #41
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Re: 2013 Insurance Premiums

when you run one of the most successful scams in history--money fro nothing, aka insurance lobby, you can say and do anything you wish to say or do without regard for the ones paying the fees ---- read the fine print.
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Old 09-09-2013, 08:25   #42
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Re: 2013 Insurance Premiums

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(...) I don't think I want to accept the explanation "you need to pay for the mistakes of others".
This is how insurance business works. You can opt out and pay only for your own mistakes.

However, here (the EU) many marinas require a proof of third party insurance. So to say, no way out. The good news is the obligatory third party insurance is roughly USD 100 a year.

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Old 09-09-2013, 08:30   #43
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I read somewhere that Sandy coupled with low fresh water lakes caused across the board increases in claims across the eastern 2/3 of the US. Some underwriters got out of the boat market altogether as a result.
Honestly I can't see how unless those losses were land based. The low water drove many boats on the hard a good month before Sandy hit this area. I don't know the statistics so its hard to guess. I called my insurance out of curiosity and grouped by zip code of the location of the boat. Odd.

Does anyone know if marine insurance follows the same type of rules homeowners or auto insurance follow? If so it can vary by state.

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Old 09-09-2013, 08:44   #44
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Re: 2013 Insurance Premiums

Mike, whether the risk is low, tiny, or overwhelmingly huge, the fact remains that losses happen. Insurance is there for those instances. If one decides to go with liability only, and absorb the risks mentioned earlier, that is their choice.
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Old 09-09-2013, 09:28   #45
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Re: 2013 Insurance Premiums

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Mike, whether the risk is low, tiny, or overwhelmingly huge, the fact remains that losses happen. Insurance is there for those instances. If one decides to go with liability only, and absorb the risks mentioned earlier, that is their choice.
Pau Hana, I'm sure you're a good honest broker. I appreciate your willingness to discuss things.

Yes. Losses happen. All sorts of stuff CAN happen. But we don't insure against all possibilities, we insure to mitigate risk. The problem is that people aren't able to make a rational risk assessment -- in part -- due to the influence of the insurance industry that only focuses on one part of the risk equation. That's bad enough, but an increasing number of areas are arising where insurance is forced on us; either by legislation or by commercial practice. The choice, as you put it, is being removed.

Now, if a boater has infinite resources (lots of money), then it matters not what they spend their cash on. But when resources are limited, money spent on insurance may be money not spent on something that might have a far greater impact on mitigating risk.
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