18.2% increase in Y insurance premium, normal or what

[Ladybirdgaffcutter]

I'm afraid you guys are paying for my boat repairs last year ...as Y paid, without quibble, for specialist repairs to my unusual yacht, in an expensive country.
I got the letter from Barrie as well, I am just a layman but it sounded reasonable.
I have insured my other boat with Y as well, it's not so much customer loyalty, but genuinely believing from real experience that Y is a good broker, I can't imagine any improvement.

 

[sailorman]

I'm afraid you guys are paying for my boat repairs last year ...as Y paid, without quibble, for specialist repairs to my unusual yacht, in an expensive country.
I got the letter from Barrie as well, I am just a layman but it sounded reasonable.
I have insured my other boat with Y as well, it's not so much customer loyalty, but genuinely believing from real experience that Y is a good broker, I can't imagine any improvement.

That is all one expects from an insurer, after all, all our pooled premiums are there to cover each other. That has always been the basis of insurance, right back to those Coffee Houses

 

[Boat2016]

I have many different policies for different things and they all try it on at renewal time and I always negotiate a figure I’m happy to pay for the level of cover provided, I take the view that insurance is there to cover anything I couldn’t afford to pay out of my own pocket so any small things I just pay and save the insurance for when I really do need it, I’m sure its my no claims record that helps keep my premiums down.

 

[MedMilo]

A mate of mine runs one of the big insurance businesses and forwarded to me a letter he'd received from one of the marine analysts a few weeks ago; here's an extract (for confidentiality reasons I thought I'd better take out the list of syndicates who've pulled out etc). But overall it sets out some context around insurance premium hikes and bears out what's been said above about claims etc...

"The global market has completely hardened, especially for yachts, with the below syndicates now having pulled out of writing marine hull business, including yachts:

11 syndicates were then listed

The reason for syndicates pulling out of yachts is that there have been a series of catastrophic losses, with Lloyd’s’ loss ratio running at circa 156% for 2016. The devastating hurricane season throughout August and September 2017 also wiped out premiums – loss ratio 175%. Additionally, this year there have been recent storms in Italy that have specifically affected the yacht book and the marine building risk market also suffered a significant superyacht fire on a new build in the Lurssen yard earlier this year.

This loss of capacity and the poor underwriting figures mean that those underwriters left are now re-rating and completely re-evaluating their book, which means owners can expect large % increases ( up to 110%) in premium, increases in deductibles, restrictions on cover and less beneficial Hull and IV splits in value. We estimate that terms are going back to rates charged in 2010/ 2011. Since then, owners have benefited from the increase in capacity and therefore more competition which has seen premiums reducing, deductibles reducing and conditions widening since this time.
We will keep you updated on market conditions. "

 

[MapisM]

the marine building risk market also suffered a significant superyacht fire on a new build in the Lurssen yard earlier this year.

Well, with respect for whoever wrote that letter - and speaking as someone who had to write similar letters in the past - the one sent from Barrie Sullivan together with the Y renewal proposal is MUCH more professional.

At least, his explanations of why for instance they are not going to cover racing yachts anymore, and they have to increase premium on "normal" boats on the other hand, are based on generic considerations, which is what really matters from an insurance standpoint.
I mean, things like unusually awful weather conditions in the Med, with a further differentiation for the Eastern part of it, which allegedly registers a higher number of collisions and groundings, hence leading to a even higher premium increase for whoever wishes to cruise East of 20°E.
Now, I'm far from being able to tell how much of this is true, let alone to which extent this affected global risks, but that's a sensible reasoning, if nothing else.

Otoh, if an insurer would use the Lurssen accident as a reason to justify a request for increasing their premium rates to a single boater/owner like myself or my boating mate, I would tell them in not unclear terms that such train of thoughts is laughable to say the least.
That accident firmly belongs to the industrial insurance league, and has bugger all to see with the risks normally involved with owning, running and maintaining a boat.
I have no idea of the reasons behind the Lurssen accident, but I know enough about fire control in industrial facilities to tell that it's something that should have NEVER happened, and asking boaters to pay for the shortcuts that obviously must have been taken by some supposedly professional German engineers within an industrial complex is, quite simply, beyond a joke. :ambivalence:

 

[jrudge]

I suppose it depends on the premium vs the payout.

It may have been considered nominal risk with a very low premium but resulted in s multi million pound payout which in a relatively small market I suppose can slew the risk / profits

The hurricane in the Caribbean I would say was business as usual! The Italy event was not really caused by weather per se but that the harbour wall collapsed so was I suspect a one in x years event.

 

[Portofino]

Well, with respect for whoever wrote that letter - and speaking as someone who had to write similar letters in the past - the one sent from Barrie Sullivan together with the Y renewal proposal is MUCH more professional.

At least, his explanations of why for instance they are not going to cover racing yachts anymore, and they have to increase premium on "normal" boats on the other hand, are based on generic considerations, which is what really matters from an insurance standpoint.
I mean, things like unusually awful weather conditions in the Med, with a further differentiation for the Eastern part of it, which allegedly registers a higher number of collisions and groundings, hence leading to a even higher premium increase for whoever wishes to cruise East of 20°E.
Now, I'm far from being able to tell how much of this is true, let alone to which extent this affected global risks, but that's a sensible reasoning, if nothing else.

Otoh, if an insurer would use the Lurssen accident as a reason to justify a request for increasing their premium rates to a single boater/owner like myself or my boating mate, I would tell them in not unclear terms that such train of thoughts is laughable to say the least.
That accident firmly belongs to the industrial insurance league, and has bugger all to see with the risks normally involved with owning, running and maintaining a boat.
I have no idea of the reasons behind the Lurssen accident, but I know enough about fire control in industrial facilities to tell that it's something that should have NEVER happened, and asking boaters to pay for the shortcuts that obviously must have been taken by some supposedly professional German engineers within an industrial complex is, quite simply, beyond a joke. :ambivalence:

Bit harsh P .

Medmilos letter makes perfect sense from where I,am reading it .Its an Anaylists summation of a particular sector .

So if I was advising clients where to park say any sum from £10 to £100 M and one piped up ( from a boat owners POV )
“ let’s have a look at marine insurance I fancy getting involved “
It’s not an area I would suggest invest in .
The tea leaves in the cup and real world experience + recent events and trends are summarised in that letter .
RISKY but
It’s anylists letter NOT a letter put out to punters That’s a different animal.

Salient point is the “ capacity “;has considerable shrunk so the underwriters , the few left will have to bear all the remaining risk .Then along with competition that’s evaporated there’s no race to the bottom with quotes .
Actuarial maths means the customer will end up paying out more for premiums to fewer syndicates .

Good news as I said Amlin are still in marine insurance with the same nicely worded policy :encouragement:

They just ask more £ /€ for it .

 

[grumpy_o_g]

It always surprises me that marine insurance is based on the hull value and seemingly little else whereas cars take into account make, model, driving experience , postcode and probably 20 more things.

The same in aviation - you pay a percentage of the "hull" value and usually have limits on the minimum experience and qualifications as to who's allowed to fly it. Hangarage, etc. will make a difference too, rather like moorings vs marinas.

 

[MapisM]

Bit harsh P .
Medmilos letter makes perfect sense from where I,am reading it. Its an Anaylists summation of a particular sector.

I understand that, but it's the "sector" definition that I'm arguing with.
Mixing the Lurssen event with the coverage of the inherent risks of boating is akin to say that road car insurances are in the same "sector" as the coverage of Wolfsburg Plant...

 

[jrudge]

The same in aviation - you pay a percentage of the "hull" value and usually have limits on the minimum experience and qualifications as to who's allowed to fly it. Hangarage, etc. will make a difference too, rather like moorings vs marinas.

True. I had an Arrow for 10 or so years - the activity is however licences and regulated and they won’t cover complex aircraft for low time pilots etc. Fortunately we never claimed !

 

[Portofino]

I understand that, but it's the "sector" definition that I'm arguing with.
Mixing the Lurssen event with the coverage of the inherent risks of boating is akin to say that road car insurances are in the same "sector" as the coverage of Wolfsburg Plant...

Yes I can see that .
I think the problem we have ( Royal we ) is that we have been spoilt by the motor car “ sector “ .
They do indeed have thousands of players ,millions of policies , millions of punters and huge actuarial support to cut , split differences in risk into many pieces and tailor together a sellable ( beat the competition) policy .
For example I have a Ferrari in the U.K. full comp £300 for a £100 K + rising value .+
The detail is my age over 50 and the low annual miles - actuarially there zilch risk form my demographic.
So it’s not the actual car it’s the owner .
Obviously if I was a premiership footballer aged 22 and commuted to work every day in and around London the actuarial support in the motor ins trade is such NOT to have a one size fits all , to look closely and score the risk .
Because it’s worth the time and effort to get the business or not identify risky business to refuse like the footballer.

The boat or ship or specifically the marine leisure seemingly has not matured enough or just it’s not got the volumes ,to differentiate a SY like Lurrsen from you and I .Yet ?
So we all seemingly share the same pool with a low number of players left to underwrite.

 

[petem]

I understand that, but it's the "sector" definition that I'm arguing with.
Mixing the Lurssen event with the coverage of the inherent risks of boating is akin to say that road car insurances are in the same "sector" as the coverage of Wolfsburg Plant...

I disagree, in the case of the Lurssen fire the yacht will have been insured (hull insurance) its own right for €600mill or whatever. This will be within the marine divisions of the insurers (QBE, RSA, Beazley, Atriu, etc). I imagine the value of the yacht dwarf the value of the hangar in which it was being built (which I imagine will be separately insured - non marine).

This is quite different to the Wolfsburg plant where the really value is in the factory (robots, production line, etc) and the value of the cars in build is relatively trivial / incidental. As you say this has nothing to do with motor insurance.

 

[MapisM]

I imagine the value of the yacht dwarf the value of the hangar in which it was being built

But that's the point, the yacht was under construction, as I understood.
If that is the case, it's bound to be still entirely under the "industrial" responsibility/risk, which has not much to see with the marine sector.
In other words, the fact that a yacht was involved is just incidental - could have been an Airbus, a truck, or a VW Golf: it still is a different kettle of fish, compared to the typical risks of cruising, flying, driving or whatever, and whether the value of what's being built is higher or lower than the value of building is just a red herring, imho.

 

[Momac]

Or maybe, it's just common practice to increase the premium upon the first renewal, after making an attractive quotation to get a new client the first time?

Not in my experience with 'Y'.

 

[petem]

But that's the point, the yacht was under construction, as I understood.
If that is the case, it's bound to be still entirely under the "industrial" responsibility/risk, which has not much to see with the marine sector.
In other words, the fact that a yacht was involved is just incidental - could have been an Airbus, a truck, or a VW Golf: it still is a different kettle of fish, compared to the typical risks of cruising, flying, driving or whatever, and whether the value of what's being built is higher or lower than the value of building is just a red herring, imho.

No, that's not my understanding. See https://www.reinsurancene.ws/pcs-designates-lurssen-shipyard-fire-as-market-braces-for-major-loss/.

Marine hull lines are assumed as the market segment that will take the brunt, with some suggesting that almost $700 million of insurance policy is at risk from this event.

In fact it has been cited by TradeWinds as potentially the largest hull claim ever to hit the market, with Lloyd’s underwriters expected to shoulder a significant share.

 

[MapisM]

No, that's not my understanding. See https://www.reinsurancene.ws/pcs-designates-lurssen-shipyard-fire-as-market-braces-for-major-loss/.

Thanks for the link, I didn't know that the accident was being dealt with in such way.
Well, I must admit that I didn't lose my sleep over it, to start with...
Anyway, if what happened at Lurssen is assimilated to any other "normal" marine insurances/risks, who am I to argue?

Otoh, I hope you will agree that it's a weird world we live in.
I mean, if there's an increase in catastrophic weather events in the Med, it's easy to see why folks like myself, yourself and most other asylum members are potentially affected - hence more "risk-exposed", so to speak.
But asking boaters to bear the costs of what happened at Lurssen is beyond a joke, regardless of how insurers decide to classify their products. :ambivalence:

 

[Portofino]

But asking boaters to bear the costs of what happened at Lurssen is beyond a joke, regardless of how insurers decide to classify their products. :ambivalence:

Yeh but over the years the upside of lumping the SY ( If thats what’s happened? ) with general leisure boats is a bigger theoretical pot .
So say ( guess ) a disproportionate few account for the revenue that makes up the payout pot .
I mean my £800 is not gonna buy many sq M of paint finish on that Lurssen.
But his £100 K premium and the other ever increasing footage of SY builds premium could easily cover a few hull scratches on my boat .

So given a choice do you want the actuaries to carve off the SY ( and [ insert size ] ) marine business off ?

Can see the geographic actuarial split as no hurricane season in the Med and can see the E of 20 degrees clause for Med boaters .
Again the actuaries just knock up a spreadsheet of the claims histories vs geography.

Having said that the recent Ligurian storms were tgey a 1 in 100 years or whatever, and accounted in the risk calcs ? It seems the latter was not . Nothing put by = rise in premiums .
The suggestion is weatherwise with global warming there’s gonna be more freak events so upward pressure to grow the payout pot . So to me the payout ratio % or what ever term is used is more unpredictable than ever .Underwritters could loose there shirts .

 

[Momac]

Just received my insurance renewal from 'Y' and it has gone up similar to the percentage indicated above.
Is this an industry wide increase ?

 

[LittleSister]

Just received my insurance renewal from 'Y' and it has gone up similar to the percentage indicated above.
Is this an industry wide increase ?

Have you read the letter that came with it, or the thread above?

 

[Momac]

Have you read the letter that came with it, or the thread above?

Yes I read the letter .
There may be insurers who have not been exposed to the same losses and have not therefore increased premiums?