A second reason boat insurance premiums are on the rise is that yacht insurance is a costly line of business to write. This is because underwriters, claims adjusters, and surveyors all need to know boats, insurance contracts and be familiar with jurisdictional issues that arise as yachts cruise around the globe. And lastly increases in loss frequency & severity due to damage from hurricanes, lighting strikes, groundings, fires and litigation have affected the bottom line for yacht insurers.
For years prices were kept low due to excess supply (more yacht insurance carriers) than demand. That ship has now sailed, causing discomfort among both boat owners and their insurance brokers. Yacht insurance underwriters and program managers now know that pricing had been unsustainably low, especially for several specific types of risk. The risk attributes identified as being the most underpriced are boats locate4d in hurricane-prone areas, areas of significant lightning activity, boats over 20 years of age, especially those under about $150,000 in value, and boats with inexperienced operators.
The remaining yacht insurers are working to return to profitability rather than deciding to also leave the market. To accomplish this, they are taking a close look at the following criteria when deciding whether or not to offer coverage: quality and reputation of the builder, exposure to wind and lightning losses and the owner’s prior boating experience.
When conditions of a market or body of water change for the worse, you want experience at the helm. The less an insurer knows about marine insurance, the more likely premiums are to be inflated and the more likely coverages you need in a policy will be missing. Working with an experienced agent dedicated to marine insurance is a must.
Written by: Craig Chamberlain
President for Novamar Insurance
February 03, 2022
