Significant losses herald a change in the insurance market
The recent hurricanes in the Caribbean, typhoons in Asia (three in Hong Kong in the space of 10 days) and the major cyclone Debbie in Australia in April have all taken their toll on the insurance industry. This, added to continued significant numbers of fires on large yachts, lightning strikes and groundings (not least the grounding of the 134 metre yacht Serene with an estimated claim currently significantly north of US$50 Million) leads us to understand there are changes afoot in the industry. The very significant claims sustained simply cannot be absorbed by a market that has seen 20 years of reducing premiums and more flexible covers. We expect to see premiums increase in the next few months and during 2018 as the full cost of these events filters through and insurers change their approach to underwriting. While no one likes to see premiums increase, its worth remembering that currently yacht insurance costs are about 1/3rd of where they were 20 years ago and, for a yacht with a value of US$10 Million to US$15 Million, still only represent about 1.5% of its annual operating cost, whereas crew and fuel are between 38% and 43% respectively.
With these events and a changing market its more important than ever to ensure a yacht is insured with specialist high quality insurers and through the best avenues possible. During the recent Typhoon Hato in Hong Kong Expat Marine experienced only one client with a claim, whose yacht was unfortunately destroyed. We are pleased to confirm that this claim was agreed and full settlement signed within 7 days of the typhoon hitting the territory resulting in happy (or much less sad) owners who are glad they chose well with their insurers. Its worth remembering the phrase ‘there is no insurance more expensive than a cheap insurance that doesn’t pay’.
Expat Marine is an independent specialist insurance broker providing risk management advice and insurance programmes to yachts and the surrounding industry. Please contact Colin Dawson at colindawson@tgg.com.hk for further information.