After the shake down of the global yachting insurance market, we can look forward to a more robust offering from a smaller but far more experienced group of expert insurance companies and advisers
Just the mention of the word ‘insurance’ to most people is enough to give the reaction of complete confusion or a deep routed doubt on what anything on the policy means or what is actually covered.
The past couple of years has seen a major change in the marine insurance market, some or indeed most people say this was a much needed move. Although superyacht insurance can be wrapped up in the ‘general’ marine insurance niche, there are some massive differences between insuring a superyacht and its compared to a 200m oil tanker, but how has it changed?
When the Lloyd’s superyacht insurance pinata got whacked too many times over the last few years, it was soft-boned insurance syndicates that fell out, not sweets. Some say it was bound to happen, others say a string of events led up to it. Whatever the reason, the events building up to this bubble-burst reads like a script from a horror movie; Nightmare on Hull Street, perhaps? Underwriters quivered in boots, hid behind sofas, went into melt down, left. It was a proper shake down of maritime cover – one So let’s look back at how it all began.
SETTING THE SCENE
In 2017 three storms ripped through Texas, Florida, Puerto Rico and the U.S. Virgin Islands. Hurricane Harvey kicked things off in late August slamming into Texas with trillion gallons of rain and 100 mph winds. Damages were estimated at $180 million. Then came Irma, devastating the Caribbean and making landfall in Florida for the first time in over ten years. Hurricane Irma left billion dollar damages across the Virgin Islands and south east America. Then Maria lashed through Puerto Rico, killing over 100 people. All three storms have been retired from the U.N. World Meteorological Organization list. According to the US Boat Owners Association, the storms (known in insurance cycles as HIM) caused damage to 63,000 boats in the US and $655 million.
A Lloyd’s report reckoned $265 billion worth of damage to boats, homes, hotels etc, and cargo.
Then 134m MY Serene ran aground in the Red sea, a 100m new build at Lurssen shipyard went up in smoke, MY Lalibela caught fire at Cannes, and so did MY Kanga. Suddenly syndicates were shelling out shed-loads to the ‘super-safe-bet’ superyacht industry. The result: Lloyd’s told its 99 members to ‘clean up’ their marine act. Syndicates closed completely or reduced their marine insurance, premiums rocketed.
In a period of recovery, is superyacht insurance is more ‘fit for purpose’? Maybe. But the rules are tougher and more stringent. Explains Michelle Van der Merwe, Superyacht Account Manager, Pantaenius, Monaco; “There was a period of uncertainty for some in the London market and there was a capacity problem for the megayachts due to their insured values, but we are finally getting into a more stable insurance market with premium levels that are more sustainable. We at Pantaenius, have been in a very good position during this uncertain time, due our fixed relationship with strong A rated German insurers and our business model, offering concierge service model and full in-house claims management.”
Reliable insurance products from stable market players will be most probably be the result believes Van der Merwe; with experts in the field who have the experience to understand the complexities of a superyacht and what insurance cover it needs. “The belief that any insurance provider can insure superyachts deeming them to be a low risk is now over and thus the market can return to some kind of ‘normality’,” suggests Van der Merwe.
According to Thomas de Campou, Sales Manager at ANP Marseille, there’s no denying that the disasters of the last few years are the greatest change to super/mega yacht insurance;- sending premiums stratospheric.
He says, “The capacity of underwriters is lower, it’s easy to insure a yacht around 70/80 million but it’s difficult to find insurance for superyachts with very high value.” He reckons Lloyd’s of London will be back in few years and for now European insurance market competitors are feeding on the rich pickings; “Today it’s the French, Norwegians or Italians that are insuring a lot of the yachts today.”
AND THERE’S MORE..
Greater premiums (now stabilising) and the bubble-burst at Lloyd’s aside, there’s more new ground to ‘cover’ in the years ahead.
“Sustainability is the watchword,” says Van de Merwe. As European governments drop their emission targets for the future, she reckons the justification of resources in the superyacht industry will be increasingly important. “And,” she adds; “with the continuing development of new technology, new owners are looking for environmentally friendly solutions in new yacht designs.”
She also foresees new owners wanting to use their yachts for longer periods of time, navigating to further afield places which will result in changes in the purpose and usage of the yacht itself. This in return will have impact on yacht design and crewing. She adds, “We have also seen an unprecedented amount of yachts heading to the Seychelles and Maldives for the winter instead of the traditional dual season in the Med and Caribbean – this is likely due to Covid-19, but it is also a desire to seek out new experiences.”
Of course, superyacht insurance per se remains a core set of requirements to protect the owner, their assets, their liabilities and the crew/guests, and this essential insurance cover does not change from year to year. But there are continuing updates that must be applied to he existing insurance covers.
“Such as technology advances in yacht design,” explains Van de Merwe, “And machinery, electronics and the increasing use of innovative materials in building yachts. The insurance products have to adapt and it is vital we keep up to date with the evolution of the yachts. Pantaenius, with its worldwide reach, is able to be at the forefront of this and is constantly reviewing the cover we offer to ensure it fits and often exceeds the owner’s bespoke requirements.”
One new development is for Cyber Risk – Cyber insurance products are being looked at for the superyacht world due to the implementation of regulations on Cyber Risk security/ management/training in the IMO from 01/01/2021.
In France, Thomas de Campou at ANP reminds us, there is the new crew insurance contract for French residents compiled in accordance with the French law. The premium per year is higher but the cover is full and includes a pension plan. The contract protects crew in case of illness and accident when off the yacht. As an aside de Campou reminds us of the importance of P&I cover; “I think that around 99% of the yachts have P&I cover but we do see some yachts that don’t and a crew members must have this cover.”
Through its broker in Germany, Pantaenius has added Professional Race cover to its arsenal of offerings, including cover for entire racing teams and all racing events. “We also are offering Specialist Fine Art insurance for superyachts,” adds Van der Merwe.
CHASING NEW DRAGONS
As the superyacht set strike out for new experiences along less-trodden trails, it’s important to find insurance products and offerings robust, dependable and strong enough to offer 100% protection if something goes wrong in remote areas. “That is one of the key strengths of Pantaenius – finding insurance solutions for the most demanding of yacht itineraries,” says Van der Merwe. “What’s more,” she adds, “our international claims network is unparalleled, we provide insurance for over 100,000 yachts worldwide, we’re experienced in house claims management and the main point, we are Brexit prepared!”
Thomas de Campou reminds us that yachts planning expeditions need to be very focused on their navigation area. He says, “It’s important to be aware of high risks areas. We can cover this navigation area but with additional premium.”
FIRST AID BOX
It should be clear as a clean cut, easy as putting on a plaster but health and medical insurance for crew is a gash of gooble de gook that a doctorate in deconstruction is not going to stop you bleeding to death or feverish with frustration.
It’s a gnarled knot of what nationality are you, where do you live, what do you do?… where do you work? And you can’t automatically expect health and medical cover to rise up and slap you on the back the minute you jump on board a boat…Unfortunately.
Laurent PREVIDENTE, Marketing Director at WYCC – Seafarer & Expatriate Benefits – has instruments to help and has agreed to stitch up the flaps of this gaping crew insurance wound.
First of all know this: There are two types of medical insurance. There’s the Individual Plan: the main advantage of this is that the plan will follow the crew member whatever the situation Group Plan: the main advantage of this is that the plan is fully paid by the employer, with additional benefits such as death and permanent disability, sickness, pension.
Says Previdente, “With our WYCC plans, we try to translate the insurance ‘jargon’ with a clear schedule of benefits. Our company policy is to cover everything EXCEPT what is written in the exclusions. This is much simpler for the client. The switch between the coverage provided by the yacht and that signed up for individually. If the seafarer chooses a different Insurance provider, they will have a waiting period for a part of the benefits (maternity, dental care) or pre-existing condition not covered.”
The WYCC benefits and rates take into account the country of residence or work location. Explains Previdente, “For example, if you’re covered by WYCC, your benefits are worldwide including USA-Canada because a seafarer needs to be free to go everywhere. Your rate will be based on your main location. The best way to go in the right direction is to ask your insurance advisor. He knows the formulas adapted to your situation.”
Generally speaking crew members are covered by the yacht owner, and because they are fit and young, the insurance is not a priority. So when a crew member slides on the deck and injures himself he is covered by the traditional crew insurance. But if he falls accidentally on top of a young stew, and then they accidentally fall in love and have a baby…. what happens? At WYCC, they’ll get maternity cover too.
Re-patriation comes under shipowner’s liability. Previdente reminds us that crew insurance, P&I Clubs and Individual Plans all cover re-patriation. That’s something Previdente thinks crew should be aware of.
When asked his views on the crew insurance market and whether Nautilus or management companies should be more involved, Previdente replied: “We’ve been urging management companies to supply crew insurance benefits for several years. Not just so as to be compliant with the MLC, but it’s also a viable retention tool and very important for the well-being of the crew member.”
For existing crew he recommends they check to see if the cover is comprehensive and if they can keep or extend the coverage between two jobs. For green crew: “As they are healthy and mainly hired as a temporary crew, they should subscribe to an individual standard plan (with benefits in case of major events such as hospitalisation).”
Finally he adds, “Your insurance advisor can assist you whatever your situation (yacht’s flag, main location, nationality, local law, charter/private yacht,…)” So make sure you ask…