The ups and downs in the Marine Insurance marketplace
Why you may be seeing rate increases in the Marine Insurance Marketplace.
We hear clients asking why are my rates going up….I’ve never had a claim; Or, Why is it going up 20% or 30%. Some policies are being non-renewed by the insurance company and the agency, (Gallagher Charter Lakes is a Specialty Marine Agency) is letting the insured know they are being non-renewed and are searching for alternative companies to offer coverage.
Marine insurance stated back in the 1680’s in a little coffee shop in England; Edward Lloyd’s coffee shop. From there, Lloyd’s became the world’s leading market for specialty insurance. Insuring ships and cargo originally and growing from that to insuring a broad array of risks. The Lloyd’s markets dominated the Ocean cargo risks and still currently backs many companies that write the yacht and pleasure boats.
The current US property insurance environment is experiencing tremendous challenges. On the personal boat and yacht side values are rising as are the costs to repair these vessels when they are damaged. In addition to hull values and personal effects, there are the P&I (Protection & Indemnity) liability, rising medical costs and pollution liability losses having an incredible impact in the marine insurance world. Settlements by the courts have never been higher, yet the marine insurance premiums remained low.
With all the competition the product became commoditized and rates stagnated with plenty of capacity, creating a situation where rates were not adequate for the risk. Many lines of business in Marine Insurance have been unprofitable for several years. Whether it was from small frequency losses like submerged object strikes, or larger losses seen when cargo ships lose much of their cargo, large yacht losses from catastrophic storms, or worse, when large pollution spills impact the environment or when people are injured and/or lose their life.
Changes in marine insurance premiums have been needed to cover losses, but now that is being coupled with a lack of re-insurance capacity and appetite due to the recent historic losses.
So, what can you do to help keep your premiums from spiking as much? Talk to your agent about credits/discounts the carriers may offer. A boating education course is one such discount. Keep your boat well maintained to avoid unnecessary/preventable losses. Increase your deductible in a risk sharing measure. Secure your watercraft. Put safety measures in place and prevent risk of injury to those on your boat. Always keep a watchful eye in all directions while operating your vessel. Respect the water.
Despite the premium increases currently being seen, cargo will continue to be shipped and people will want to go fishing or boating. The boating and shipping industry keeps the world afloat.
There’s an old saying I heard as a child, “and this too shall pass.” We’ve gone through soft markets in insurance and hard markets and this cycle is hardening right now. This too shall stabilize with disciplined underwriting and disciplined watercraft owners and operators.
*Gallagher Charter Lakes is a Specialty Marine Agency and wholesaler of marine insurance products, representing dozens of top rated insurance companies.