Looking for a moderately bright spot in the boating industry? Try the marine insurance business. Policy retention is solid, new lines are being written in larger craft and new boats are being insured in higher percentages than in the recent past. Agents report business is steady, and in some camps up, and those working harder are gaining payoffs in high renewals.
Insurance business is holding its own or gaining because competition for policies is up and resulting premiums are down. Some major changes have occurred on the supply side, notably including Warren Buffet’s Berkshire Hathaway flogging the Geico Gecko to be aggressive in small craft and Lloyd’s of London sharpening its pencil to remain competitive in yachts. Domestic companies like ACE, Travelers, AIG, Chubb and Progressive have become aggressive in both pricing and available capacity.
“Having new competition in the market continues to add capacity and keeps prices stable,” observes Mike Smith, president of Michigan-based Global Marine Insurance. “On new business, rates are trending lower than the pre-storm years.
Having a concentration in certain parts of the market by major underwriters has thus far improved insurance availability.”
What a difference a few years make! In 2006, after Hurricanes Katrina, Rita and Wilma tore up much of the Southeast, boat owners there saw rates almost double, if they could get coverage at all. Commercial lines for marinas and on-water businesses took similar hits and many just had to go “insurance bare.” The problem wasn’t confined to “at risk” areas, but went nationwide to build the claim reserve pool.
“With the absence of storms the last few years, new carriers are jumping in and driving boating rates down,” says Jim Okonski, executive vice president of Atlass Insurance Group based in Ft. Lauderdale. Not so on land, he adds: “Since Wilma, property rates doubled, now rates are back to about 30-percent higher than before the storms. For us in the marine marketplace we are up, not by much, but we are positive. Our Lloyd’s ‘Seawave’ program for boats from $50,000 to $2,000,000 is growing substantially every month.”
Capacity in the important Florida market is also slowly coming back, and some of it has to do with the improvement in hurricane risk-management techniques like Hurricane Clubs, hurricane engineered storage buildings and the insistence of the insurance companies for well thought out, written storm plans for owners.
Enhanced policies are another plus in the current market.
“Experienced boaters with newer, quality yachts are realizing benefits in terms of competitive premiums, increased coverage limits, and expanded navigation areas,” says Craig Chamberlain, senior vice president of Mariners General Insurance Group in Newport Beach, Calif.
Chamberlain says several insurers are offering multi-policy discounts when insuring the yacht, home, auto and personal umbrella together. In addition to reduced rates, premiums can be consolidated and billed on one or two invoices to simplify the process. A cautionary note in this regard: It’s important to insure yachts with marine specialists that have multiple direct insurance company contacts.
The good news flowing from the marine insurance sector can be leveraged by many in boating. It’s time to touch base with the insured for a checkup or to alert prospects to the attractive rates. With availability and competition strong, the potential for providing a customer benefit and improving business cash flow are opportunities not to be missed.
Steps to take now:
Are all customers insured? Some areas are still returning to availability and owners who chose to drop insurance may now be able to get it.
Review coverage and rates – gaining a lower premium or greater benefits is a significant customer service. Reviews or referrals may result in new or increased revenues.
Examine underwriter offerings and policies to make sure coverage is adequate.
Has equipment on the vessel changed? Have stated cruising limits changed. Can enhancements be added at the same or reduced premium cost? Can policies be “bundled” to gain premium discounts?
Is the “agreed to” value too high or low recognizing changes in used boat prices in the market?