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Old 06-25-2021, 10:16 AM   #3
AlanT
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City: Gig Harbor, WA
Vessel Name: MoonShadow
Vessel Model: Wendon Skylounge 72'
Join Date: Oct 2012
Posts: 721
Quote:
Originally Posted by oscar View Post
No, not the usual lament. I was thinking.... yes I know, dangerous.

There are health expense coops, more often than not run by churches. Groups of basically self insured people. All put money in the pool, and it's not a lot compared to commercial health insurance. You pay for the little stuff. Doctors visits, minor meds etc etc. But if you end up in the hospital for 200K they pay the bill.

I am sure there are actuary types on this forum. Could we have coops of boat owners that self insure? Not for the little stuff, say $10,000 deductible. But agreed values for liability and catastrophic loss, with serious requirements for storm prep etc etc. And if the wrong storm hits at the wrong time and the fund gets wiped out it pays pro rated on the insured values and dissolves........

Not perfect but better than nothing......
Yes you could. Among the problems: Insufficient members of the pool in early years for an actuarial loss forecast to be of much use; Refusal of Lenders to accept pool coverage in lieu of coverage with a rated insurer; similar refusal from Marinas to accept pool coverage in lieu of a rated insurer.

For the pool to work at all it would have to be significantly cheaper than commercial insurance AND produce enough income to pay the claims.

The problem is that Commercial yacht insurance in general is not particularly profitable. The insurers operate at a combined ratio of around 100% (+/- 10%). Meaning that expenses of claims, operating expenses, salaries etc constitute approximately 100% of income from premium. Insurers have to keep the majority of their cash in liquid form. The income from that stash provides the profit in the business. As we all know interest rates for short term investments are essentially 0% which is one reason why insurance premiums have been escalating in the past 2-3 years.

Most successful pools (am thinking here principally about MedMal pools put together by Medical professionals for their medical malpractice liability) start out buying reinsurance commercially for 90% or more of their exposure. They retain 10% of the risk, and 10% of the premium and over the years if they are successful they are able build capital and therefore reduce the reinsurance purchase percentage and retain more of the premium.

~A
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