2019 Yacht Insurance Market Update
Following years of soft market conditions in the personal yacht insurance segment, we are now in the midst of an unprecedented market correction. Years of overcapacity, underpriced risks, and the impact of back-to-back hurricane seasons has finally taken a toll.
In previous years, Lloyd’s of London insurance syndicates (groups of underwriters who price and assess risk) provided a significant amount of coverage for yachts across the world. However, we have seen a shift to hard market conditions with many syndicates no longer insuring luxury yachts. Not only are premiums increasing substantially, but limited capacity in the London market has resulted in tightening of coverage, including higher deductibles and little underwriting flexibility making it more difficult to obtain coverage.
We can point to a few main reasons for this shift:
- Years of over-capacity created a competitive market with unsustainable premiums.
- Back-to-back hurricane seasons in 2017 and 2018 resulted in significant losses.
- Insurers have tightened their requirements in an effort to return to profitability.
Plan Ahead for a Smooth Yacht Insurance Placement
A change in any marketplace may cause some choppy waters, but don’t despair. There are still insurance options — many in the domestic US — available to yacht owners. However, in times like these, it’s critical to plan ahead.
Whether you’re building or buying a new yacht, it’s essential to communicate with your yacht insurance broker early. If you currently have coverage through Lloyd’s, discussing insurance options three to four months in advance of your policy expiration will allow enough time for your broker to provide you with the right coverage and the best possible terms to protect you and the risks associated with your yacht. If you’re rushing to find coverage, your options may be limited.
Of course, it’s also important to work with a yacht insurance expert who truly understands the unique risks and lifestyle of a yacht owner as well as the changing yacht insurance marketplace. If you haven’t talked to your yacht insurance advisor about an upcoming renewal or change in coverage, it is a good idea to reach out in advance.