2013 Insurance Premiums

[capttman]

Originally Posted by Mike OReilly

That's still a pretty big "compartment" isn't it?

Can you explain further? Why is it bad advice to go with liability only? Assuming one is willing to accept the risk to one's own vessel, what's wrong with this approach?

Not a thing. Only thing to make sure of us if the liability includes removal in case the boat sinks.

[Pau Hana]

Originally Posted by Mike OReilly

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.

If only the crystal ball (or Magic 8 ball) could step in and make all things crystal clear.....risk could be avoided in its entirely.

Sudden, fortuitous events (aka accidents) can be surmised in a formula or on a spreadsheet- but they are never 100% spot on. The areas that fall thru the cracks are where insurance comes into play.

I think that people are becoming more and more educated about insurance. Discussions like these help to dispel the myths about insurance being the bane of our existence, and the evil entity that takes money and has no intention to pay claims.

[Mike OReilly]

Originally Posted by Pau Hana

If only the crystal ball (or Magic 8 ball) could step in and make all things crystal clear.....risk could be avoided in its entirely..

The point is not to avoid all risk; that's impossible. The point is to approach risk rationally.

Originally Posted by Pau Hana

Sudden, fortuitous events (aka accidents) can be surmised in a formula or on a spreadsheet- but they are never 100% spot on. The areas that fall thru the cracks are where insurance comes into play. .

True. But surely there is room for rational assessment of the cost-benefit analysis. That's all I'm pushing for. When insurance becomes mandatory, whether by law or by commercial/cultural practice, then the option to assess things rationally is removed.

Originally Posted by Pau Hana

I think that people are becoming more and more educated about insurance. Discussions like these help to dispel the myths about insurance being the bane of our existence, and the evil entity that takes money and has no intention to pay claims.

No one has suggested insurance is the bane of existence, or evil. It is an industry that makes money based on fear. Sometimes that fear is warranted (like driving a car in a city, for example). Sometimes that fear is unwarranted (such as most boating activities).

I do wish people would become more educated about insurance, or more accurately I wish they would become better able to assess risk. I believe the evidence suggests the opposite is happening.

[goboatingnow]

I do wish people would become more educated about insurance, or more accurately I wish they would become better able to assess risk. I believe the evidence suggests the opposite is happening.

could you point to that "evidence". I personally think that we see more insurance becuase of the rise of personal litigation processes. these days everyone wants to sue the insurance company.

dave

[Mike OReilly]

Originally Posted by goboatingnow

could you point to that "evidence". I personally think that we see more insurance becuase of the rise of personal litigation processes. these days everyone wants to sue the insurance company.

Yes, this seems to be especially true in the US, although like most of these trends, Canada is following the same path. With the trend you point to, it's kind of a self-perpetuating cycle. People learn they can sue and get big settlements, so people try to protect themselves with bigger coverage, which then inspires more suits...

That said, my observation about our decreasing ability to assess risk is a more general one, and not just confined to insurance. The most risky activities most of us do are things like drive or walk in a city. Eating some commonly consumed food is far more risky than boating will ever be for most people. We insist on using huge resources to clean up some toxins to the parts-per-billion, yet we spew other pollutants willy-nilly. We expend huge resources on all manner of "crime" issues, yet we in NA have never been safer. We fret about being killed by terrorists, illicit drug use or house fires, yet the greatest risks are high blood pressure and obesity (by many magnitudes).

Here's a fun site that helps put some of this stuff in perspective. It's based on the UK's National Health System (NHS).

BTW, using this UK data, boating & plane accidents account for 0.00912 of annual deaths.

[Pau Hana]

Originally Posted by Mike OReilly

Yes, this seems to be especially true in the US, although like most of these trends, Canada is following the same path. With the trend you point to, it's kind of a self-perpetuating cycle. People learn they can sue and get big settlements, so people try to protect themselves with bigger coverage, which then inspires more suits...

That said, my observation about our decreasing ability to assess risk is a more general one, and not just confined to insurance. The most risky activities most of us do are things like drive or walk in a city. Eating some commonly consumed food is far more risky than boating will ever be for most people. We insist on using huge resources to clean up some toxins to the parts-per-billion, yet we spew other pollutants willy-nilly. We expend huge resources on all manner of "crime" issues, yet we in NA have never been safer. We fret about being killed by terrorists, illicit drug use or house fires, yet the greatest risks are high blood pressure and obesity (by many magnitudes).

Here's a fun site that helps put some of this stuff in perspective. It's based on the UK's National Health System (NHS).

BTW, using this UK data, boating & plane accidents account for 0.00912 of annual deaths.

Interesting site- but totally irrelevant. The UK site is about mortality factors leading to death. The claims bell curve for vessel insurance leans the other way- the overwhelming majority of claims processed are for repairable vessel damage. Total vessel losses account for (as John Kerry put it ) an "unbelievably small" percentage of claims filed.

Citing stuff to make it fit a viewpoint doesn't make it factual- I see it more as grasping at straws.

[Mike OReilly]

Originally Posted by Pau Hana

Interesting site- but totally irrelevant. The UK site is about mortality factors leading to death. The claims bell curve for vessel insurance leans the other way- the overwhelming majority of claims processed are for repairable vessel damage. Total vessel losses account for (as John Kerry put it ) an "unbelievably small" percentage of claims filed.

Citing stuff to make it fit a viewpoint doesn't make it factual- I see it more as grasping at straws.

I did not say the number represented claims, but it is a proxy for risk. Sorry if that eluded you. Besides, I was trying to make a broader point. Also sorry if that wasn't clear.

Dig out the boat accident data for the US. You're an insurance broker. You should have that at your finger tips. I did, and posted it here on CF some months ago when we had a similar discussion. It's not hard to find...

But if that is too hard for you then here's an easy one. What percentage of your active policies result in a payout -- for any reason -- in a year? I know you have that number since it affects the business directly. How many claims vs how many policies? My "viewpoint," as you put it, is that boating is very safe. Are you saying the opposite? That boating is highly risky? Is that your viewpoint? If so, show me the stats.

[Blue Stocking]

Originally Posted by colemj

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.

Mark

Friend who was very high up, in very large company, told me when you make a claim, get everything you can get, because next year, the actuaries won't care who you are.

[Pau Hana]

Nope, it didn't elude me- I simply find your data not relevant to the subject matter. Risk is risk- at the same time, health insurance is quite a far reach from vessel insurance.

I agree that boating is safe. At the same time, there are losses, and not all losses are reported to the USCG. Garnering information about boating losses is somewhat moot, as (as mentioned earlier) SSO claims, towing, theft, and like claims comprise the overwhelming majority of claims processed. The ratio of losses to policy holder is low, but they do occur. Now, is it responsible to play the odds, and figure that a loss won't happen to you, and self insure? Some do so, and find great success in doing so. Some do so, and have paid losses out of pocket as a result of a claim against them- not to mention the costs to repair their vessel.

Insurance is about risk transference, and only the individual can elect to either participate or not.

I think that your viewpoint is to make a point and have agreement with it, based on your personal experience or what you have gleaned from internet hunting. My viewpoint is that this is what I do, day in and day out, as a chosen profession; I believe that insurance is something that is fiscally responsible, especially as it is not mandated by law.

Is it fear? No. When I filed a claim for damage to my Bravo 3 outdrive on a previous boat, it was comforting that the $7000 repair bill was covered less a $500 deductible- and my renewal premium went up by a whopping $40.

[Mike OReilly]

Originally Posted by Pau Hana

Nope, it didn't elude me- I simply find your data not relevant to the subject matter. Risk is risk- at the same time, health insurance is quite a far reach from vessel insurance.

Once again, that reference was NOT there to buttress my point. It was an interesting factoid pulled from the data. It has some relevance to the insurance discussion, as you seem to agree, but it was not presented "as evidence."

Originally Posted by Pau Hana

I agree that boating is safe. At the same time, there are losses, and not all losses are reported to the USCG. Garnering information about boating losses is somewhat moot, as (as mentioned earlier) SSO claims, towing, theft, and like claims comprise the overwhelming majority of claims processed. The ratio of losses to policy holder is low, but they do occur.

Again, citing the fact that there are some losses is meaningless. Of course there are. There are some people who get hit by meteors too. That doesn't mean the risk is high.

What is the percentage of payouts to active policies? Since you say the USCG data is not good enough to base my decision on, please provide us with your data so I can be better informed of the real risk.

Originally Posted by Pau Hana

Insurance is about risk transference, and only the individual can elect to either participate or not ... I believe that insurance is something that is fiscally responsible, especially as it is not mandated by law.

Here's why I chafe. If it was simply up to me, then we're all good. If your personal risk assessment demands that you buy insurance, then no problem. Fill your boots, I say. But more and more I am being effectively forced into making this choice. Sure, I can choose not to have insurance, as long as I never go into a marina, never go to the fuel dock and never get hauled out of the water.

Not really much of a choice, is it?

Let me try this another way. We both agree there is a small risk to typical boating activities. If the insurance costs were commensurate with that risk level, then no one would bat an eye. But when insurance costs rise beyond what the risk demands, then we get into this kind of discussion. It's a cost-benefit analysis. If the risk is low (as we seem to agree), then the cost of insurance should also be low. I rarely hear boats claiming their insurance rates are low ... do you?

[Pau Hana]

But you do have a choice, Mike, as we all do. You can choose to purchase insurance, self insure, or carry about sans insurance- or to not boat. Perhaps you can carry a personal surety bond in lieu of an insurance policy.

Boating (like general aviation) is seen as "luxury' or desired pasttimes, and there are relatively few companies offering insurance for boats and planes. Also, the cost of a total loss for a vessel can easily reach 6 figures- and that figure can increase should there be liability/medical/pollution/personal effects claims to be paid as a result of that loss.

I personally find vessel insurance reasonable in price- I cover my personal vessel (liveaboard with high coverages and low deductible, Puget Sound navigation) at $180k for $1200/year. That, to me, is very inexpensive relative to the coverages.

[Mike OReilly]

Originally Posted by Pau Hana

But you do have a choice, Mike, as we all do. You can choose to purchase insurance, self insure, or carry about sans insurance- or to not boat. Perhaps you can carry a personal surety bond in lieu of an insurance policy.

Yes, but as I just wrote:

Originally Posted by Mike OReilly

Here's why I chafe. If it was simply up to me, then we're all good. If your personal risk assessment demands that you buy insurance, then no problem. Fill your boots, I say. But more and more I am being effectively forced into making this choice. Sure, I can choose not to have insurance, as long as I never go into a marina, never go to the fuel dock and never get hauled out of the water.

Not really much of a choice, is it?

So, do I really have much of a choice? I would choose to carry no insurance if I could (just like I carry no home insurance). But that would effectively bar me from operating my boat. It's a choice in name only.

Originally Posted by Pau Hana

Boating (like general aviation) is seen as "luxury' or desired pasttimes, and there are relatively few companies offering insurance for boats and planes. Also, the cost of a total loss for a vessel can easily reach 6 figures- and that figure can increase should there be liability/medical/pollution/personal effects claims to be paid as a result of that loss.

OK, this is the last time I'll whack this dead horse, I promise ... Once again all you're saying is that there are some claims, and some of those are big. This does not address the risk of boating. It only highlights the potential impact of an event, while ignoring the probability of the event.

Originally Posted by Pau Hana

I personally find vessel insurance reasonable in price- I cover my personal vessel (liveaboard with high coverages and low deductible, Puget Sound navigation) at $180k for $1200/year. That, to me, is very inexpensive relative to the coverages.

Agreed. I may give you a call when I'm forced to buy insurance . Although ... $1,200 buys me a whole new anchoring system. I bet that would be far better "insurance" than giving you my limited financial resources -- unless I win the lottery and my boat sinks .

[jimking100]

Pau Hana, I don't have a dog in this fight but Mike has asked a couple times for your "payout to policy ratio" and you keep ignoring the question. Does that smell funny to anyone else? To me, it is suspect at best.

[RainDog]

What amazes me is how backwards boat insurance is. Car and home insurance rates are finely tuned to your risk factors (zip code, age, house construction, etc.). Boat insurers seem to have no notion of risk. Everyone pays the same. Greatly decreasing your risk does not yield any savings and insurance companies do not try to push boaters into reducing risk. This is especially galling with BoatUS, who for many reasons should be trying to push boaters to safer practices.

The most egregious example of this is marina selection. The major risk to insurance in my location is Hurricanes. If I hurricane hits my area, the boats in the hurricane hole marina will almost certainly be fine. The boats in the marina next it will have significant damage, and the boats in the fixed pier marina next to that will all be lost. In Ike, the "hurricane hole" marina lost one boat, the one next to it dozens of boats, and the fixed piers were pretty much a total loss. Yet the insurance company does not distinguish between these locations.

Another example. My boat is well kept. The boat next to me is a derelict. The dock lines are undersized, badly UV damaged, and have no chafe protection. The upper shroud is broken off at the chainplate (years ago). The shore power cord is severely UV damaged. It is only a matter of time before this boat catches on fire or the mast falls on another boat. Any kind of serious wind will part the dock lines and set it adrift. Yet they pay the same rates as me.

Seems like there is an excellent opportunity in the Marine insurance market for a company to use risked based pricing to undercut the industry and make a fortune.

[Blue Stocking]

This could go on until the cows come home. Bottom line:-if it didn't make a heap of profit, the company wouldn't sell it.