Boat Insurers: Cartel or not? Time to leave BoatUS?

[taxwizz]

Originally Posted by sepharad

I am not interested in anyones opinion about global warming, nor their politics. We are talking dollars and loss vs profits, and so do insurers. They give a hoot about my opinion or my politics. What they care about is profits and losses. They ARE the model for loss prevention analysis. No matter what YOUR or MY opinion is on global warming, THEIR opinion, based on hard, scientific professional analysis is that it is warming faster than ever recorded before. It is causing a steadily increasing of severity and regularity of climactic disruption and storms. It will continue and INCREASE In the future.

Awwww Come on. Let's have a friendly discussion of politics, emphasizing everyone's friend.

[seamaiden]

I find Buffet's statement odd. In fact, recent news reports say that while the number of extreme weather events has not increased, the severity of the events has worsened. This is a trend which has been developing for a number of years.

Originally Posted by Mediaguy

Warren Buffet has a lot of money invested in the insurance industry and took the time to look at if there were any more, or more extreme weather events today than in the past. His conclusion was that there are NO more events now than in the past. When asked why insurance rates were going up - quote: "their profit taking".


You can see the interview here:

[sv Stella Maris]

For Info Only Knowledge, No comments please.

2016 Lagoon 450F cat: agreed value $450kUSD
-no depreciation
-2% hull deductible
-$40k named storm deductible
-extended cruising dates range in hurricane belt
-Caribbean & US waters, excluding Cuba, Venezuela, Comlumbia

Policy Annual : $8,900 USD

I've shopped all carriers and a dozen brokers. This is the best I could do this year.

[Montanan]

On average, premiums range as a percentage of your hull amount. They average from 1% – 3% normally. So a $200,000 boat with a 1% rate would cost $2,000 to insure or a $100,000 boat with a 3% rate would be $3,000 to insure.

What exactly determines your rate?

Well there are many factors used by an underwriter but here are the big ones:

Age of vessel – newer boats get lower rates, but have higher values.
Type of construction – fiberglass, wood, steel, carbon fiber.
Condition of vessel.
Navigation area and navigation times.
Lay-up times.
Your experience and history.
Deductibles and exemptions.

[pembquist]

Somebody said it up thread but I want to reiterate it more forcefully. The primary profit that an insurance company makes is from investment. I was told by a man who worked in casualty insurance for decades that the price and availability of casualty insurance varied with the anticipated investment climate. If the company sees opportunity the window opens up, premiums are low lots of new policies are written; if the investment climate looks bad the window slams shut rates go up fewer policies are written. The profit comes from the time value of money, the time between when a policy is written and premiums are collected and when claims are paid out. Premiums/Claims can be less than zero, with the use of actuarial science this is simply an interest rate. As a source of capital it is ordinarily extremely competitive with borrowing, one reason Berkshire is so successful is that it's cost of capital is low as a lot of it comes from insurance. I am not an expert by any means however I think it is more complicated then "they are gouging us for profit" or "it is because of all the claims this year."

The other thing I wanted to mention with regard to not having insurance is the truism that you are not supposed to insure for will be merely painful but for what will ruin you. If you have a 10,000-30,000 boat you most likely only need insurance for liability. The confusion to me is that say in the case of an automobile comprehensive doesn't really seem to cost very much in absolute dollars and seems justifiable almost from the point of view of convenience vs haggling with a body shop. I think I have an alleged 9000 of "stated value" insurance on my sailboat which I probably shouldn't have but it costs so little. It is kind of like the "Extended Warranty" psychology.

[Shaneesprit]

Originally Posted by sepharad

Area of operation. Had reduced loss...is only my guess. It's all pretty heartless, based on dollars and cents.

Option 6 buy a smaller boat - my insurance is less than $400 comprehensive
Don’t even know how much it was - about the same as one of my cars - UK based

[valhalla360]

Originally Posted by sailorboy1

This whole "have to raise rates because there were claims last year" is just BS. That is the whole reason they and us do the insurance. They act like it is a surprise to them that once in a while a hurricane acturally comes along and destroys boats. You know, that weather event for which they have been telling us is the reason we have been paying so much all along.

If you look at overall hurricane damage, 2009-2016 were below average payouts.

2017 what a whopper at roughtly 10 times the payout per year compared to the prior 7yrs. Followed by 2018 at around 3 times normal payouts.

Since you don't renew every month, it takes a while for them to compile everything and run it thru the regulators to approve increases, so 2019/2020 being a period of big increases makes sense.

Bottom line, either they collect enough to cover losses or they leave the market.

[valhalla360]

Originally Posted by ohdrinkboy

so, for a $2 million liability policy, having $2 million in funds set aside. Doubt that many people who are self insured really have the funds set aside.

You've explained why most people don't don't self insure. Doesn't mean it isn't allowed.

It's actually done sometimes with large organizations. If you have a 10,000 company cars, there is a very good chance, your payouts will tend to be pretty consistent from year to year. as they average out over so many. So if you compare the insurance premium on 10,000 cars compared to what you expect to pay out plus the cost to self manage the plan, if it comes out cheaper, you may decide to self insure (there is paperwork, bonds and other hassles that only make sense with economy of scale).

For an individual, you don't have the huge numbers that average out, so while you may have many years with no claims, when you do get a claim it will often be many times more than your insurance premium and for many it's more than they can afford to lose.

[mtwolf13]

Same for me. I have been a Boat US member for years but when I went to renew my insurance, it went up like the Space Shuttle. I called thinking they had made a mistake. I was told "Normal Increase." I ended up going with Progressive Marine Insurance. It was cheaper than what I was originally paying Boat US. Screw GEICO!

[Shaneesprit]

You Americans are getting ripped off by the sound of it!
I have a Porsche 911 a BMW 520 and a 25ft Catamaran, all on different policy’s with different companies and I pay $1250 in Total All are insured fully.
I expect to add a high risk house to that list soon but even that’s around $500 when I can find someone to agree to insure it 😝

[CaptWho]

Originally Posted by Shrew

When the payouts increase, cost is distributed equally amongst it's members.

It's funny how the costs increase, but never decrease in the years that claims go down.

[Creedence]

Originally Posted by CaptWho

It's funny how the costs increase, but never decrease in the years that claims go down.

USAA sent me a couple rebates due to low claims across their auto insurance portfolio this year, but I’ve yet to see it with boat or homeowners insurance.

[Tonali99]

Originally Posted by sepharad

I understand that several insurers have been slammed, and I mean slammed, but weather. They spread the loss to remain in business and maintain their profit margin, or go out of business.

I understand this is why Pantaenius left the US market after hurricane Irma.

This also is a result of another and probably the most important role of insurance companies. Loss analysis for the purpose of underwriting.

I am not interested in anyones opinion about global warming, nor their politics. We are talking dollars and loss vs profits, and so do insurers. They give a hoot about my opinion or my politics. What they care about is profits and losses. They ARE the model for loss prevention analysis. No matter what YOUR or MY opinion is on global warming, THEIR opinion, based on hard, scientific professional analysis is that it is warming faster than ever recorded before. It is causing a steadily increasing of severity and regularity of climactic disruption and storms. It will continue and INCREASE In the future.

Irma ALONE damaged or destroyed 50,000 vessels and approximately $500 million in recreational boat damage. Harvey inflicted $155 million Damage on about 13,500 boats.

Now project that as increasing in frequency, regularity and severity.

20% is tough. I know it. Insurance is drying up for ANY increase in liability...age, experience, area of operation...you name it. If they can identify it, they will. It's how they survive. I am slowly but surely being shut out as well. Eventually they will say, "nope".

Boy am I glad my policy hit before Laura.
side bar: My friends home insurance went up after the hurricanes a few years ago. He lives in Western New York. Surprised?

[Cool Hand Luke]

What's the average cost of an insurance policy? 1% of the value of the boat? 1.5%? 2%? 2.5%? 3%?

[Cool Hand Luke]

Originally Posted by sv Stella Maris

For Info Only Knowledge, No comments please.

2016 Lagoon 450F cat: agreed value $450kUSD
-no depreciation
-2% hull deductible
-$40k named storm deductible
-extended cruising dates range in hurricane belt
-Caribbean & US waters, excluding Cuba, Venezuela, Comlumbia

Policy Annual : $8,900 USD

I've shopped all carriers and a dozen brokers. This is the best I could do this year.

Wow! That's awesome!!! Great boat... very expensive policy but only 1.98% of the value of the boat, so therefore... about average based on what people pay. I think mine is around 2.12% of the value of the boat.

But it sounds like you have an awesome policy with great coverage and very few limitations. Good job!!