Insurance

[goeasy123]

We've been talking amongst a group of cruisers considering establishing not-for-profit Group Self Insurance. If you would like to get involved in one of the following activities please PM me with your interest:


1. Insuring my boat.
2. Providing advice and governance to the endeavor.
3. Management and administration.

Any comments welcomed?

[tkeithlu]

I'd love to join an insurance pool, but insurance has got to be there when everything else goes wrong. If my boat wreaks another and sinks in the process, the total insurance bill is USD 1,400,000. Can you possibly come up with the capitalization to cover a hurricane with a couple of hundred insured boats on the bottom?

[Shrew]

Mutual Insurance is not a new concept. It is historically the underlying principle of insurance.

It's been discussed here as well:

https://www.cruisersforum.com/forums...self+insurance

It's certainly not going to be cheaper. Just do the math. 10 people all with $50,000 boats. One boat sinks. Either you collected enough in premium payments to cover the loss, or the members are assessed the $5,000 each to cover the loss. Certainly, on paper, it is better to pay $5,000 rather than $50,000, for that one individual. However, you really need a lot of members to make this financially advantageous.

[gcrothers]

There are currently 153 listed on the OCC west to east webpage as traveling from Carribbean to Europe. Of those 153 there are 51 listed as solo. Now this may not be 100% accurate but it is a sizeable number nonetheless. These guys including myself will all be uninsured, Additionally, Marinas nowadays require liability insurance before berthing. This is proving very difficult to obtain. Pantaneius, GJW, Topsail all refuse to offer.

[goeasy123]

gcrothers... Your pointing to a specific gap in the market that the retail providers don't want. 3rd Party Liability only can either be 1) limited to the levels specifically demanded by 3rd parties or 2) for unlimited claims the book can be covered with stop-loss insurance. i.e. the endeavor doesn't do all risks insurance.



Shrew... Good points. It's not new and there are already syndicates out there. They all closed books and specifically formed to under cut consumer level pricing in the open market.


tkeithlu... The retail insurers have the same 'black swan' claim issue as closed book syndicates. There are a number of ways of covering this, but, as you're probably aware, the insurers treat it as a cash flow problem and increase premiums of everyone in subsequent years. In the short term there are various 3rd party mechanisms to cover cash flow.... the cost of which is factored into premiums.


The problem we have is finding enough syndicate members. How do we do that?

[Belezar]

Pantaneus gave me liability a few months ago. New policy.

[Shrew]

Originally Posted by goeasy123

the insurers treat it as a cash flow problem and increase premiums of everyone in subsequent years.

OF course, and based on my example, one loss and you would have a 'cash flow' problem as well. Hence the assessment to the members, otherwise the next claim will go unpaid.

You're treating this like there is some insurance conspiracy. At the end of the day, you need to collect equal to or greater revenue in premiums than you pay out in claims.

[Belezar]

If there was real profit in it then someone would be doing it. You would be able to maybe find the right group of owners and the right terms (in other words a specific slice of risk), and the right reinsurance. Costs would be less. But deductibles would be high.

[captlloyd]

The mind is like a parachute, it must be open to function. Personally I would say I would be interested, tell me more. Some of you folks have a very simplistic view of how insurance works. It may not be very accurate.

[goeasy123]

Originally Posted by captlloyd

The mind is like a parachute, it must be open to function. Personally I would say I would be interested, tell me more. Some of you folks have a very simplistic view of how insurance works. It may not be very accurate.

It depends on what people are interested in. But initially we're thinking 3rd party liability only. The liability is limited on a case by case basis to what a individual might need. E.g. If you sail in Turkish waters and marinas in Turkey demand $500,000 cover to use their services you would pay a premium just for that.


The group risk will be covered by stop loss insurance, So that cover can be guaranteed. There will be no profit taken or brokers commission. There will be a cost for admin, but this will be negotiated on a yearly basis in advance and the cost declared in open book accounting to all group members. Premiums will be invested in a bond and any margin made will be returned in premium discounts to renewing group members.


In the initial stages and for those wanting all risks or other higher levels of cover we can get a bulk discount from a commercial insurer, but there doesn't seem to be as much demand for this yet. The aim would be to eliminate brokers commission to make it a better deal.



We are off course open to other suggested models?


Captlloyd... if you want to be added to the list please PM me.

[roverhi]

Years ago State Farm offered world wide coverage with no crew requirements or survey and at about the same cost as others strictly coastal policies. A few of us cruisers who were insured by them were sitting around talking about how great a deal the State Farm policy was. The conversation swerved to how we knew of at least 4 boats with State Farm insurance that were in disrepair, had been semi-abandoned, and/or for sale forever in out of the way islands that had been lost when the solo owner/skippers suddenly returned and tried to sail them home. Amazingly all these lost boats happened to go down close to an island with frequent direct air service to the world. Interestingly all these solo skippers had managed to inflate and launch their dinghies, fit the engines and had enough gas to make it to a harbor near one of those airports. Now why is insurance so expensive and there are so many restrictions/requirements to the policies??

[goeasy123]

Originally Posted by roverhi

Years ago State Farm offered world wide coverage with no crew requirements or survey and at about the same cost as others strictly coastal policies. A few of us cruisers who were insured by them were sitting around talking about how great a deal the State Farm policy was. The conversation swerved to how we knew of at least 4 boats with State Farm insurance that were in disrepair, had been semi-abandoned, and/or for sale forever in out of the way islands that had been lost when the solo owner/skippers suddenly returned and tried to sail them home. Amazingly all these lost boats happened to go down close to an island with frequent direct air service to the world. Interestingly all these solo skippers had managed to inflate and launch their dinghies, fit the engines and had enough gas to make it to a harbor near one of those airports. Now why is insurance so expensive and there are so many restrictions/requirements to the policies??

An interesting story, but please be aware that the plan is not to insure boats. Only 3rd party liability.

[slug]

Originally Posted by roverhi

Years ago State Farm offered world wide coverage with no crew requirements or survey and at about the same cost as others strictly coastal policies. A few of us cruisers who were insured by them were sitting around talking about how great a deal the State Farm policy was. The conversation swerved to how we knew of at least 4 boats with State Farm insurance that were in disrepair, had been semi-abandoned, and/or for sale forever in out of the way islands that had been lost when the solo owner/skippers suddenly returned and tried to sail them home. Amazingly all these lost boats happened to go down close to an island with frequent direct air service to the world. Interestingly all these solo skippers had managed to inflate and launch their dinghies, fit the engines and had enough gas to make it to a harbor near one of those airports. Now why is insurance so expensive and there are so many restrictions/requirements to the policies??

Cruisers , live aboards, present a very high insurance risk

I’m surprised that any insurance company would cover them