Shrinking insurance market
Yacht owners who want to sail further afield are being advised to provide extra information, such as evidence of sailing experience, in order to improve their chances of finding a policy.
Over the last 18 months, many cruisers have struggled to find cover for extended cruising such as high latitude or ocean crossings, which is perceived as the high risk end of the yacht insurance market. For others, premiums have become unaffordable.
A number of factors have been identified for the current situation, including unprofitable cheap insurance cover caused by increased competition and years of investment in the insurance market and Lloyd’s of London syndicates. The billions of pounds paid out after the 2017 Atlantic hurricane season, which saw 17 storms, including 10 hurricanes, and the €590 million insurance claim after a major fire in the Lürssen Shipyard in September 2018 have also contributed to investors leaving the market.
The managing director and senior underwriter at new broker and insurance provider Stoneway Marine, Keith Lovett, said with fewer brokers in the marketplace offering limited cover, boat owners were choosing to accept bigger excesses or consider buying only liability and port risk cover.
‘Sailors planning any sort of extended cruising are advised to start searching for cover earlier and have the expectation it will now take longer. They should also be prepared to provide underwriters with more information, such as a detailed cruising itinerary, evidence of sailing experience, rig reports and surveys and plenty of photos. All of this will increase chances of finding a policy,’ said Lovett.
He added that while some premiums were falling, many were continuing to rise at between 5-15% per annum, which would continue for the next few years.
Martin Fuller and his partner Stephanie Connor have struggled to find cover for their planned trip to Greenland and Iceland.
The couple left the UK in April 2019, crossed the Atlantic to the USA and have now reached Nova Scotia in Fuller’s Sadler Starlight 39, Sandpiper. They have changed their trip to avoid overwintering in Greenland and are still trying to find cover to sail straight from Conception Bay, Newfoundland, the northern limit of their current insurance cover, to Iceland via Cape Farvel in southern Greenland.
‘I am not prepared to go uninsured. I am a cautious sailor but things do go wrong and while Stephanie has high latitude experience, I have none,’ explained Fuller.
‘It is frustrating as people who tend to go to extreme areas are amongst the more experienced sailors seeking insurance and tend not to have a problem,’ he added.
Insurance agent Pantaenius said extended cruising was not ‘inherently a poor risk, however loss ratios for extended cruising can be high’ as yachts often needed to be shipped for repairs due to a lack of quality facilities or remoteness of location.
Its head of UK sales and marketing, Simon Tonks, warned owners against reducing their premium at the expense of insurance cover, especially during longer passages or Atlantic crossings. He said those who have a relationship with their insurance company do have an advantage, and insurers will ‘look very closely at the condition of the yacht and the skills of the skipper when it comes to challenging passages.’
‘If it is extremely difficult to find insurance cover, this can sometimes be interpreted as a signal to reconsider one’s own assumptions. In the end, a seaworthy yacht and the necessary know-how are vital,’ stressed Tonks.
He said some high latitude cruisers were choosing to go uninsured, although highlighted that lightning strikes, storms or heavy weather and fires had the most impact on premiums rather than uninsured boats.