MARKET FORCES & INSURANCE PREMIUMS
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.”