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Back in August multiple trade reports cited trouble on the horizon for those navigating the yacht insurance market; earlier this month, in an interview with Insurance Business, a UK boss talked about the “terrible time” being faced by the sector… now we bring you the latest from Zurich-owned Navigators & General (N&G) as it sheds light on market prospects.
First off, there’s good news.
The yacht and motorboat insurer exclusively told Insurance Business how its superyacht policy sales are surging as the market goes through what it called a radical shake-up. It said the number of policies bought for vessels between £1 million and £10 million has increased by nearly 40% in three years. In fact, this year’s sales have already surpassed numbers for 2017.
“The superyacht market is undergoing an unprecedented period of change,” noted N&G speciality development manager Charles Knight. “Overcapacity and strong competition has sent rates to an all-time low in recent years.
“With some insurers charging an insufficient premium to cover losses, there’s been a steady stream of providers withdrawing from the market. Some of these risks have come to us. We underwrite each risk on its own merit but with the end of the year still to go, we’ve already exceeded last year’s figures.”
Part of the growth was attributed to enhancements in N&G’s Prestige policy, and to the Brighton-based insurer’s clearly defined risk appetite, pricing, and strategy.
Market outlook aka the bad news
In the face of choppy waters for the sector, the Zurich-owned firm has offered insights as to what could lie ahead.
“In the London market, brokers are struggling to get line slips filled up,” Knight told Insurance Business. “Where lead and follow insurers are being lost at the top end of the market, it’s starting to have a knock-on effect as there is less appetite for risk, and insurers are hesitant to increase their capacity.
“This is likely to make it harder for superyacht owners to secure the same coverage as before. We could begin to see open market wordings from some insurers becoming more restrictive and the flexible cover of the past sold at a premium.”
Knight also pointed to a potential rise in re-broking, as he cited fears that the claims experience will suffer amid the market’s instability.
“If the worst happens, brokers and their clients want confidence that their insurer will respond and settle their claim quickly,” explained the N&G executive. “This could provoke clients to review their current insurer and drive an increase in re-broking across the market.”
Meanwhile an even wider threat looms, with international markets possibly beating London in terms of where business is placed as capacity is reduced.
“Overseas markets often rely on the insight of London for referrals and advice, but with some insurers pulling out, it could lose its competitive edge,” said Knight. “It’s more important than ever that insurers and brokers work hand in hand to achieve a sustainable and profitable marketplace.”
