Future of marine insurance

[Tenedos]

A link shared on a different thread has made me thinking:

"Let’s distill it all down. If you go to the pure essence, you’ll find that unless there is marked change in attitude, and if there are more natural disasters in quick succession, then no one will be able to get marine cover. Yes. The problem is that serious. So, obviously you cannot do anything about the natural disasters, but you can do a lot about taking responsibility for your craft if it is in named peril areas, by performing proper preparation." -John Curnow (Taking responsibility for your craft written in 2019)

This was written three years ago and if anything the situation has worsened. Ian brought this to the forefront, I can't even imagine what the reaction from the insurance industry will be in the aftermath.

This is certainly not only about marine insurance but the impact to marine insurance will likely to be the worst. Again quoting from the article:

[I"]So a company will look at their best risk, and also their worst, and if they are losing money, the first one to go is the one at the bottom of the profit table. At the moment, the worst risk in pretty much everyone’s book worldwide is the marine risk [...] They do not have to insure you just because you own a yacht. It is a privilege, not a right."[/I]

It is a scary thought that marine insurance either disappears or becomes way too expensive to be practical.

[anotherT34C]

Honestly, as long as basic liability remains an option, I don’t really care.

[Chotu]

it’s true. I agree with another T34C.

maybe both should be more like investments. Don’t own what you can’t afford to lose.

[Sailor Sailor]

The coincidence of three trends certainly adds to insurance risks:

1. Global warming
2. People buying bigger boats than in the past
3. Novices or relatively inexperienced folks buying more expensive craft, often with financing

The insurance industry could implement some commonsense requirements to minimize their risk, such as the following:

1. We will not insure anyone in the Northern Hemisphere who keeps their boat south of 35 North during hurricane season - June 1 to Nov. 1st.
2. We will not insure anyone buying a watercraft larger than 30' who has less than 5 years boating experience.
3. We will not insure anyone financing a watercraft who has less than 5 years boating experience.

Those requirements would eliminate a tremendous amount of proceeds paid out.

[Tenedos]

I think there is more here than individual preferences. Insurance is a key part of financial ecosystems. Whether it is for boat manufacturers, charter companies, lenders, marinas, etc, insurance plays a role on the health of this ecosystem. If that leg gets disrupted, I think we can expect indirect exposure and impact elsewhere.

[Mike OReilly]

Originally Posted by anotherT34C

Honestly, as long as basic liability remains an option, I don’t really care.

Basic liability is already hard to access in many markets. I don't see it getting any less so.

Despite the damage done by these seemingly increasingly powerful storms, the overall risk that most boaters face is actually quite small. It's why liability insurance (when you can find someone to sell it) is very inexpensive. The real risks are quite low -- for most.

What I'd like to see is these high-risk areas carved out of the general pool. If you choose to keep your boat in a high-risk area, then you are accepting a much larger risk than most boaters. So instead of asking the entire pool to pay for these high-risk activities, I hope they isolate them into their own pool, and charge the necessary premiums to support it.

[goboatingnow]

This problem seems to be almost exclusively US based. Here in Europe I see little issue around insurance and people seem happy they are getting competitive renewals at the moment.

Even after my lightning strike claim my renewal premium invoice just issued. I have full cover plus environment damage plus option guest and crew accident cover and my renewal was competitive

[hlprmnky]

I’m in a very different situation than most folks on this forum, I’d wager, but for the next few years at least my plan is to build up experience and confidence on Lake Michigan, daysailing and cruising to anchorages while finding out how much tolerance for the liveaboard lifestyle my spouse and I actually possess.

The southern shore of the lake really does not support an “on the hook” approach, though; there are anchorages a couple days’ sail from my home port but the vast majority of available routes will involve overnighting in at least one transient slip, plus of course there’s the question of winter storage every season.

I have started out with a very small, inexpensive boat - a Catalina 25 - and I am comfortable carrying liability-only insurance on this modest investment in self-education, but in order to make use of those transient slips and winter haul-outs, I do have to have at least liability coverage.

Allstate has already kicked my boat off my home-and-auto plan for being too old; they were able to connect me with Merkel and get a policy for this year, but as the market continues to be constricted by events like Ian and the Corsica microburst earlier in the year, what happens if/when small-potatoes sailors like me can’t get liability insurance from anyone?

I guess there’s always looking for chances to crew passages on the boats of wealthier, better-established folks, but that’s not the dream I’m dreaming with my little Catalina today.

[Rumrace]

All I know is Ian will be the excuse to raise all of north americas rates. Those not suffering yet stayed tuned.
Bahamas Hurricanes cancelled lot of companies in the game of denial.

[Simi 60]

Originally Posted by goboatingnow

This problem seems to be almost exclusively US based. Here in Europe I see little issue around insurance and people seem happy they are getting competitive renewals at the moment.

That article is from Pantaneaus Australia.

Here, when Lloyds stepped away as underwriter and Berkjshire Hathaway/ Chubb stepped in, we personally had our full comp insurance premium go up 400% and deductable went up 700%
We have not made a claim in over 30 years and our vessel is outside of cyclone areas

Needless to say we went else where, but that year in between we were forced to accept 3rd party only and it was still 60% higher than the prior years full comp.

The insurer we use now for full comp is still around 200% higher than our 2018 premium but the deductable is down to a reasonable amount.

The big issue I see happening is vessels here mostly can't come out for maintenance unless they have insurance.
If large chunks of coin are being set aside for insurance, some won't be able to afford as much maintenance as they need. (I know I'd rather throw the extra $5000 at maintenance vs insurance)

And if vessels don't get maintenance that can affect their safety and life of vessel.

Boats start sinking, insurance payouts increase, premiums go up, owners forgo Insurance in favour of better maintenance but can't get lifted for maintenance without insurance, yards close down and and and

A vicious circle be created

[Rumrace]

GEico had a racing cat burn and sink amortized the loss on us is my bet and stopped insurance in Bahamas.
I’ve always been open to a boaters coop insurance but I’ve no complaints on cost. The only fight I’ve with an insurance company was a classic car and they lost.
The I wonder where the scavengers who want to take advantage of an insurance write off intend to get it insured.
Years ago no worries insure anything that floated

[Rumrace]

Lloyd’s are masterful con artists. They sell shares in high risk to investors to dumb not to realize they have not invested in Lloyd’s amazing returns. A group of dentists from Hamilton lost millions in a Florida hurricane cause that’s the block which they invested in.

[Tortuga's Lie]

In an ideal world, those of us that have never had a claim, will keep the premiums at a reasonable rate and those that have suffered losses, will have a bit higher premiums but alas, I fear that the loss will be spread out amongst all of us sheep.................bummer.

[goboatingnow]

Originally Posted by Simi 60

That article is from Pantaneaus Australia.

Here, when Lloyds stepped away as underwriter and Berkjshire Hathaway/ Chubb stepped in, we personally had our full comp insurance premium go up 400% and deductable went up 700%
We have not made a claim in over 30 years and our vessel is outside of cyclone areas

Needless to say we went else where, but that year in between we were forced to accept 3rd party only and it was still 60% higher than the prior years full comp.

The insurer we use now for full comp is still around 200% higher than our 2018 premium but the deductable is down to a reasonable amount.

The big issue I see happening is vessels here mostly can't come out for maintenance unless they have insurance.
If large chunks of coin are being set aside for insurance, some won't be able to afford as much maintenance as they need. (I know I'd rather throw the extra $5000 at maintenance vs insurance)

And if vessels don't get maintenance that can affect their safety and life of vessel.

Boats start sinking, insurance payouts increase, premiums go up, owners forgo Insurance in favour of better maintenance but can't get lifted for maintenance without insurance, yards close down and and and

A vicious circle be created

Again I can’t comment on the situation in Australia. I’m with Pantenious and my premium has remained consistent this year even after my lightning strike claim.

Talking to my friends none report any particular issue with insurers and are typically able to get several competitive quotes.

Perhaps the sheer number of sailing boats in Europe gives insurers a broader spread of risk. I have a friend who’s a broker in Spain. He’s not opining that the market is haywire. He’s resells Lloyds policies in the main. ( I don’t like his policies. ).

[Fore and Aft]

Simi60 is right about Australian insurance. It's almost compulsory now, certainly none of the yards I deal with will slip an uninsured boat. Which is a real shame as it pushes up the costs of a budget sailor. Neighbours near us have a third party liability with wreck removal and are paying twice what I am paying for fully comprehensive. There vessel is 40 years old and where as ours is 6 years old. Both boats are similar value and in the same marina. This whole insurance thing is why I will often survey boats that are beached. That way the owner can get some sort of cover and then get slipped. What I am finding interesting is how many surveys I am doing just so owners can get third party insurance. The other interesting thing is third party used to be cheap yet a lot of my customers seem to be paying a premium just for third party.
Cheers