Yacht rates tick up amid market uncertainty
Rates in the yacht market have registered risk-adjusted increases of at least 10-20 percent at renewals in the last month amid continued uncertainty, according to market sources canvassed by The Insurance Insider.
Underwriters speaking to this publication said increases were being achieved on the majority of yacht hull and machinery business but cautioned these would not make up for years of claims, including insured losses of at least $655mn caused by hurricanes Harvey, Irma and Maria last year.
“We are just in a void at the moment, trying to work out exactly where the market is,” a source said.
Generally speaking, the majority of accounts have come in with rate increases of between 10 percent and 20 percent, but the market also saw some significant outliers with huge increases, they added.
Most sources canvassed expressed concern about uncertainty surrounding available capacity following the withdrawal of multiple markets.
Earlier this month, Brit affirmed its commitment to US yacht business. However, the carrier is understood to have significantly scaled back its London operation and is no longer underwriting business as a lead market on at least five facilities.
“So far no one has replaced Brit on the facilities they lead, which has forced us to stand back and wait to see what carriers will do,” one broking source said.
It is unclear what will happen to the facilities at this juncture but the market has speculated that Markel International could step in to lead one of them.
Brit’s move to cut its London yacht book follows Argo’s withdrawal from the line of business at Lloyd’s in May, and Aspen’s withdrawal from marine hull earlier this month.
Carriers are also understood to be reticent about accepting new business after the inclusion of yacht business in a crackdown on underperforming classes of insurance launched by Lloyd’s management in May.
“With the current Lloyd’s review in train, carriers are waiting to see what happens,” a source said.
“The direction of travel is that Lloyd’s don’t want to see growth and they may not want to see any kind of increase in liabilities,” they added.
While the hull and machinery sub-segment of the yacht market has been most problematic for underwriters, recent uncertainty has also hit yacht protection and indemnity (P&I) business.
As insureds switch carriers to achieve lower hull and machinery business, they are also moving their P&I insurer.
One source speaking to The Insurance Insider said the yacht P&I market was seeing a significant uptick in business turnover.
“Let’s say the hull placement sees a massive increase and the client chooses to go elsewhere.
“We tend to be the victim of these changes, which really doesn’t help yacht P&I rates,” they added.
This publication revealed last year that mutual marine insurer Norwegian Hull Club had notified its reinsurers of an initial $105mn loss from the Sunsail yacht account after Irma, although the loss total was feared to rise.
Two of Sunsail's yacht fleets were wrecked by the Category 5 hurricane as it tore through the French territory of St Martin and the British Virgin Islands last month