The Future of yacht insurance
Yacht insurers are in a tight space. At the tail end of last year, hurricane Irma made its way across the Caribbean and settled on the Florida Keys.
For insurers, the category five storm was the second costliest hurricane on record – causing $64.76 billion in damages. $200 million of which was in yacht claims alone.
Its safe to say that there was almost no yacht insurer unaffected by last year’s hurricane season. Whilst the number of claims differed depending on the insurer, one of the biggest names in yacht insurance, Pantaenius, saw close to a thousand claims alone in the wake of Irma.
As a result, we have seen a number of insurers leave the market because it’s just no longer profitable to insure yachts.
On the second day of this year’s Floating Life Captains Meeting in Monaco, guest speaker Simon Ballard, managing director of London-based yacht insurance broker CRS Yachts, gave an example of how even some of the biggest insurance firms have been operating at a loss recently.
Mr Ballard said: “For last 3 to 4 years, we have been seeing premiums of around £120 million sterling a year coming into Lloyds for yachts but seeing £140 million a year going out in settling claims. Yacht insurers have been losing money for the last 3 to 4 years.”
Now is a pivotal moment for yacht insurance. The market has been soft for the past 10 to 15 years, but things are shaking up.
Mr Ballard outlined four key ways in which the insurance market will be changing over the next few years. He expects specialist yacht insurers to continue to leave the market – with people still insuring yachts but no real fresh faces coming in to focus exclusively on yachts.
The market will also harden. As is inevitable with an increased number of claims, Mr Ballard expects insurance premiums to rise across the board and the type of coverage offered to change.
Underwriting on insurance is likely to become more selective, with riskier deals that would have previously been accepted being completely uninsurable.