In About-Face, U.S. Ap­proves Boat In­sur­ance for Cuba Travel

Passage Maker - - News & Notes - BY PETER SWAN­SON

Pan­tae­nius, a U.S. marine in­surer, told Pas­sageMaker that it will be of­fer­ing cov­er­age for Amer­i­can boats trav­el­ing in Cuban wa­ters. This elim­i­nates a ma­jor bar­rier to cruis­ing and fish­ing Cuba.

Ten months ago, the di­vi­sion of the U.S. Trea­sury Depart­ment that reg­u­lates in­ter­ac­tions with Cuba un­der the U.S. Em­bargo an­nounced that U.S. cit­i­zens with a le­gal rea­son to travel to Cuba could do so by boat—their own boats. How­ever, the reg­u­la­tions did not per­mit U.S. in­sur­ers to of­fer hull in­sur­ance.

Thus, in­sur­ance is­sues have proven to be the ma­jor dis­in­cen­tive for the many Amer­i­can boaters dream­ing of vis­it­ing Cuban wa­ters. This was true when AIM Marine Group ( Pas­sageMaker’s par­ent com­pany) or­ga­nized a Cuba rally in April and as ar­tic­u­lated to us by the many boaters who have sought to visit the is­land na­tion on their own.

Pan­tae­nius is a Ger­man in­surer with a U.S. di­vi­sion. Cary Wiener, pres­i­dent of Pan­tae­nius USA, said his le­gal team pe­ti­tioned OFAC months ago seek­ing a change in reg­u­la­tions to al­low his com­pany to pay claims that hap­pened in Cuban wa­ters. The prob­lem was the Em­bargo’s stated pro­hi­bi­tion on pay­ing dol­lars to Cuban gov­ern­ment en­ti­ties or in­di­vid­u­als.

OFAC, which stands for Of­fice of For­eign As­sets Con­trol within the U.S. Trea­sury, re­cently up­dated its online Fre­quently Asked Ques­tions page with this lan­guage:

80. May per­sons sub­ject to U.S. ju­ris­dic­tion pro­vide cer­tain in­sur­ancere­lated ser­vices (such as cargo or hull in­sur­ance, or rein­sur­ance) to per­sons sub­ject to U.S. ju­ris­dic­tion who are en­gag­ing in au­tho­rized ac­tiv­ity in Cuba?

Where the pro­vi­sion of in­sur­ance-re­lated ser­vices is di­rectly in­ci­dent to ac­tiv­ity au­tho­rized by gen­eral or spe­cific li­cense, then the pro­vi­sion of such ser­vices is au­tho­rized as well...

And:

81. Does a per­son sub­ject to U.S. ju­ris­dic­tion re­quire an OFAC spe­cific li­cense to pay an in­sur­ance claim that arises from au­tho­rized ac­tiv­ity in Cuba if the pay­ment in­volves a Cuban na­tional?

Where the pro­vi­sion of in­sur­ance-re­lated ser­vices is au­tho­rized by gen­eral li­cense, ei­ther ex­pressly or as a trans­ac­tion or­di­nar­ily in­ci­dent to a li­censed trans­ac­tion, this au­tho­riza­tion ex­tends to the pay­ment or set­tle­ment of claims, in­clud­ing to a Cuban na­tional.

Pan­tae­nius may have stolen a march on the com­pe­ti­tion, but it is cer­tain its ad­van­tage will be short-lived be­cause U.S. in­sur­ers, such as AIG and the Gowrie Group, have also demon­strated their in­ter­est in the mar­ket for Cuba cov­er­age.

Wiener says Pan­tae­nius of­fers a nav­i­ga­tion area for Florida and the Caribbean, which has hereto­fore ex­cluded Cuba. Now, he says, customers will be able to “buy back” Cuba cov­er­age for up to 20 days for an ad­di­tional 10 per­cent of their to­tal pre­mi­ums with a $500 min­i­mum. (Pan­tae­nius only cov­ers boats val­ued at $200,000 or more.)

If that seems steep, con­sider Pan­tae­nius’ ra­tio­nale. Wiener says he be­lieves that many dam­age claims short of a to­tal loss will re­quire that the ves­sels in ques­tion be towed back to Florida for re­pairs be­cause of the lack of marine in­fra­struc­ture in Cuba and re­main­ing ob­sta­cles left from the Em­bargo.

Ac­cord­ing to Wiener, Pan­tae­nius will re­quire ap­pli­cants for Cuba cov­er­age to af­firm that they qual­ify for one of the 12 so-called “gen­eral li­censes” that let U.S. cit­i­zens travel legally to Cuba—no dif­fer­ent from what the travel agen­cies re­quire to book air travel to the is­land. AIM’s rally par­tic­i­pants, for ex­am­ple, qual­i­fied un­der the “peo­ple-to-peo­ple” ed­u­ca­tional li­cense. An­other pop­u­lar li­cense for Amer­i­cans with boats are in­ter­na­tional com­pe­ti­tions such as sport­fish­ing tour­na­ments and sail­ing re­gat­tas.

Wiener says the customers will af­firm that they are trav­el­ing to Cuba legally and will abide by U.S. reg­u­la­tions, but Pan­tae­nius will not in­ves­ti­gate fur­ther. The com­pany’s honor sys­tem for ap­pli­cants re­flects the U.S. gov­ern­ment’s own, al­most nonex­is­tent en­force­ment pol­icy.

What boaters have done up un­til now—those not brave enough to go unin­sured—is to pur­chase a pol­icy from a Lon­don syn­di­cate, such as Lloyd’s. In my own case, this rep­re­sented an in­crease in the cost of my cov­er­age, val­ued at $65,000, from $1,400 a year to $2,100. Lack­ing a pres­ence in the U.S. mar­ket, these syn­di­cates op­er­ate out­side the con­fines of the U.S. em­bargo, although some ex­perts will de­bate that point.

One of the par­tic­i­pants in AIM’s Cuba rally, “Ral­lies to Cuba: Learn the Lingo,” says he paid an ad­di­tional $8,000 for syn­di­cate cov­er­age of his boat dur­ing the rally. That’s a lot con­sid­er­ing the risk. The only pe­riod dur­ing which his pre­vi­ous in­surer would have de­clined a claim con­sisted of transit from Cuba’s 12-mile limit to the docks of Ma­rina Hem­ing­way, where it would re­main for two weeks be­fore head­ing back to in­ter­na­tional wa­ters.

All in all, this is a huge im­prove­ment and is cer­tain to fuel fur­ther ex­plo­ration of Cuba’s coast by Amer­ica’s boaters. The down­side is that Ha­vana’s only ma­rina will likely be over­taxed in the im­me­di­ate as it strug­gles to ex­pand the num­ber of berths. And it’s very bad news for those bro­kers who have been mak­ing hay while the sun shines, sell­ing Lloyd’s poli­cies.

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