Vessel insurance update Spring 2020

I’m writing this from our home (M/V Pau Hana) dockside here in Seattle, playing by the current rules of “Stay Home, Stay Healthy”. I hope this finds all of you well and, like Kathy and I, eager to get out on the water to cruise, fish, and simply enjoy our passion.

Like the Covid situation, the opening months of 2020 have seen vessel insurance enter uncharted new territory. As I alluded to in the Fall 2019 insurance update, things have changed dramatically here stateside, as well as for our offshore cruising friends.

• Domestically, a very large Pacific Northwest insurance carrier, Premier Marine Insurance, has apparently completely vacated the market. I’ve had numerous boating friends and neighbors report that they have received notice from Premier stating that their coverage has been non-renewed, and they must secure new coverage immediately.
• Pantaeneius USA has departed the market.
• GEICO Marine has capped the age of new business to vessels no older than 50 years of age.
• The number of insurance carriers catering to those wishing to cruise offshore (Trans-Atlantic, Trans-Pacific, South Pacific) have dwindled to but a handful- and the criteria to obtain said coverage has become extremely stringent (experience, crew complement, vessel parameters, and more).

Lest I seem all doom and gloom, I’ve very optimistic that the vessel insurance carriers that remain standing will be better and stronger for their customers. Many of the companies that have exited the market had unsustainable, artificially low rates- which led to their demise. I can see potential rate changes, as well as a relaxing of some insuring criteria as things settle out.

We’re taking this time to complete boat projects that have been on the table too long, and looking forward to a great summer on the water with friends. More later in the summer update!

Thanks for the update Pete!!

I just received a notice from my auto insurer (American Family) they are sending me a rebate check of $50.00 for every vehicle I have insured with them. They say "less driving, less accidents" as the reason.

I also insure my boat with them. No word on boat insurance though.

My bottom line on boat insurance is this: My boat is owned free and clear. On a good day it isn't worth much, certainly not more than I can afford to loose or walk away from. I have cheap, not very inclusive boat insurance. I figure that my exposure while boating is to other boats I may damage and to fines and clean up should I cause some catastrophic pollution incident. I am well covered from these liabilities. From my own loss, not so much..

pete

Pete,
Do you know if geico will insure liability only in Florida 50 ft vessel
Bud

Pete Meisinger said:

I just received a notice from my auto insurer (American Family) they are sending me a rebate check of $50.00 for every vehicle I have insured with them. They say "less driving, less accidents" as the reason.

I also insure my boat with them. No word on boat insurance though.

My bottom line on boat insurance is this: My boat is owned free and clear. On a good day it isn't worth much, certainly not more than I can afford to loose or walk away from. I have cheap, not very inclusive boat insurance. I figure that my exposure while boating is to other boats I may damage and to fines and clean up should I cause some catastrophic pollution incident. I am well covered from these liabilities. From my own loss, not so much..

pete

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You have a very realistic scenario and have a good handle on your exposures- I recommend you review your policy for pollution and liability coverages so you have a good understanding of those exposures.

Bud said:

Pete,
Do you know if geico will insure liability only in Florida 50 ft vessel
Bud

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Yes, they will. GEICO requires a survey for both hull coverage insurance and liability only insurance. There are other markets that will offer liability coverage without a survey.

Paul - any companies you know of that will do liability plus environmental and salvage?

I am in FL and may get squeezed if I can't move north by July and a survey doesn't go too well.

psneeld said:

Paul - any companies you know of that will do liability plus environmental and salvage?

I am in FL and may get squeezed if I can't move north by July and a survey doesn't go too well.

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Yes- we can get you coverage that has liability, pollution, and some wreck removal without a survey.

Pau Hana said:

Yes- we can get you coverage that has liability, pollution, and some wreck removal without a survey.

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Thanks...will let you know.

Hi Paul,

Could you speak for others to the below:

Was in contact with IMIS Grasonville, MD about possibly converting my Florida exclusion (06/01 - 11/01) to a remain in FL policy because of Covid19. It was explained to me that it was unlikely that my insurer (Chubb) would be willing to convert my policy as they felt they might be seeing a large number of owners in the same situation.

While other options (through IMIS) are available, all would require a haulout survey. The good news is that Chubb views my marina as a substantially lower risk, and has extended my required departure to July 1st.

I have no issue with either IMIS or Chubb with regard to the current anomaly and will be North of 32 Degrees latitude by June 1st. Paul, was hoping you would explain to others how a situation such as this could cause insurance companies to limit policy conversions based on a larger than desired exposure in a given market.

Ted

I have Geico through Boat/US. Our boat is 33 years old so I guess I have 17 years to find something else. But probably in 17 years I will be reduced to a pontoon boat, the horrors, if I am still boating.

O C Diver said:

Hi Paul,

Could you speak for others to the below:

Was in contact with IMIS Grasonville, MD about possibly converting my Florida exclusion (06/01 - 11/01) to a remain in FL policy because of Covid19. It was explained to me that it was unlikely that my insurer (Chubb) would be willing to convert my policy as they felt they might be seeing a large number of owners in the same situation.

While other options (through IMIS) are available, all would require a haulout survey. The good news is that Chubb views my marina as a substantially lower risk, and has extended my required departure to July 1st.

I have no issue with either IMIS or Chubb with regard to the current anomaly and will be North of 32 Degrees latitude by June 1st. Paul, was hoping you would explain to others how a situation such as this could cause insurance companies to limit policy conversions based on a larger than desired exposure in a given market.

Ted

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Hi, Ted,

Last I spoke with my Chubb contacts (last Thursday), there has been no decisions made as to how to handle north/south cruisers.

In a given CAT market (let's use Brownsville, TX to the Atlantic FL/GA border) any insurer limits themselves to a certain capacity of their overall risk tolerance- once that capacity is reached, the insurer may either cease to write additional coverage or offer terms less any wind exposure. These terms can be change by the insuring company at any time. This Covid situation is wholly new territory, and the markets are showing themselves to be fairly flexible under the current circumstances.

I don't think there will be many conversions from north/south to full time CAT unless the situation is greatly extended. The insuring companies, in my opinion, don't want to overexpose themselves in the CAT areas, and a long tern extension would most certainly lead to policy conversions.

O C Diver said:

Hi Paul,

Could you speak for others to the below:

Was in contact with IMIS Grasonville, MD about possibly converting my Florida exclusion (06/01 - 11/01) to a remain in FL policy because of Covid19. It was explained to me that it was unlikely that my insurer (Chubb) would be willing to convert my policy as they felt they might be seeing a large number of owners in the same situation.

While other options (through IMIS) are available, all would require a haulout survey. The good news is that Chubb views my marina as a substantially lower risk, and has extended my required departure to July 1st.

I have no issue with either IMIS or Chubb with regard to the current anomaly and will be North of 32 Degrees latitude by June 1st. Paul, was hoping you would explain to others how a situation such as this could cause insurance companies to limit policy conversions based on a larger than desired exposure in a given market.

Ted

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Be careful with an agent suggesting what Chubb is likely or unlikely to do. There are going to be boats in FL that wouldn't normally be and most insurers are going to be making exceptions or providing riders. They can't ignore the reality and maintain customers.

BandB said:

Be careful with an agent suggesting what Chubb is likely or unlikely to do. There are going to be boats in FL that wouldn't normally be and most insurers are going to be making exceptions or providing riders. They can't ignore the reality and maintain customers.

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B, I have gotten waivers at no cost before through my agent and feel that they do a very good job keeping me informed and giving me options, as they did last week. As Paul mentioned below, I don't believe Chubb would accept the entire risk pool converting and remaining in FL. My agent did offer me two other insurance company options to remain in FL for the year, so I doubt they are uninformed as to which way Chubb is leaning. In fact, I would assume that my agent would be more than happy to convert my existing policy with my existing insurer if it was as simple as writing a check. I feel confident that getting North by June 1st won't be an issue. Having my agent secure an extension to July 1st at no cost is also greatly appreciated.

Ted

Pau Hana said:

I don't think there will be many conversions from north/south to full time CAT unless the situation is greatly extended. The insuring companies, in my opinion, don't want to overexpose themselves in the CAT areas, and a long tern extension would most certainly lead to policy conversions.

Click to expand...

O C Diver said:

B, I have gotten waivers at no cost before through my agent and feel that they do a very good job keeping me informed and giving me options, as they did last week. As Paul mentioned below, I don't believe Chubb would accept the entire risk pool converting and remaining in FL. My agent did offer me two other insurance company options to remain in FL for the year, so I doubt they are uninformed as to which way Chubb is leaning. In fact, I would assume that my agent would be more than happy to convert my existing policy with my existing insurer if it was as simple as writing a check. I feel confident that getting North by June 1st won't be an issue. Having my agent secure an extension to July 1st at no cost is also greatly appreciated.

Ted

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Don't overlook the part when Pau said as of Thursday, Chubb had not made any decisions. Your agent's assumptions may turn out to be true, but it's likely too early to know. Good that he is looking into alternatives as well. I think this decision like so many that have to be made can't really be made until we know more about timing.

I received my insurance renewal this week and was happy to see no increase in my coverage after what happened to me last year.
However will ask the boat to be only insured for storage as it won't splash this year, don't want to be insured for navigation.

L

My renewal with Boat US was a modest increase of less than 10%. On the other hand, my aviation policy went up by 20%. I lot of insurers are abandoning niche market products. Also, they have been looking more closely at their loss ratio’s. Underwriting experience requirements are tightening in the aviation markets as well

BandB said:

Don't overlook the part when Pau said as of Thursday, Chubb had not made any decisions. Your agent's assumptions may turn out to be true, but it's likely too early to know. Good that he is looking into alternatives as well. I think this decision like so many that have to be made can't really be made until we know more about timing.

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B, I understand that Chubb hasn't made a final decision, but they may be explaining to the insurance brokers which way they are leaning and why. My agent is very good. This and last year she gave me 2 or 3 policies to compare. Her response this week included that the two other policies were available as a remain in FL option. So she is thorough. Waiting for Chubb to decide, isn't an option in my opinion. Playing musical chairs to see if I may be able to buy a policy and get an out of water survey at the last minute isn't an option either.

Ted

O C Diver said:

B, I understand that Chubb hasn't made a final decision, but they may be explaining to the insurance brokers which way they are leaning and why. My agent is very good. This and last year she gave me 2 or 3 policies to compare. Her response this week included that the two other policies were available as a remain in FL option. So she is thorough. Waiting for Chubb to decide, isn't an option in my opinion. Playing musical chairs to see if I may be able to buy a policy and get an out of water survey at the last minute isn't an option either.

Ted

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I wouldn't wait on what might or might not happen either. Are any of the others requiring a survey for you to switch? I hate switching insurers but sometimes it's the only choice.

T210DRVR said:

My renewal with Boat US was a modest increase of less than 10%. On the other hand, my aviation policy went up by 20%. I lot of insurers are abandoning niche market products. Also, they have been looking more closely at their loss ratio’s. Underwriting experience requirements are tightening in the aviation markets as well

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My BoatUS policy renewal increased a not-so-modest 12%. No history of claims.

Comodave said:

I have Geico through Boat/US. Our boat is 33 years old so I guess I have 17 years to find something else. But probably in 17 years I will be reduced to a pontoon boat, the horrors, if I am still boating.

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If I'm understanding Pau Hana's post correctly, the 50 year old cap, only applies to new business. So I think you're good.

Not so here. Hub Barton had a renewal rejected as over 50 years old, they could not
get it placed anywhere else.

mahal said:

If I'm understanding Pau Hana's post correctly, the 50 year old cap, only applies to new business. So I think you're good.

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Correct- currently, all existing GEICO business is grandfathered in, and the 50 year cap applies only to new business.

Pau Hana said:

Correct- currently, all existing GEICO business is grandfathered in, and the 50 year cap applies only to new business.

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I guess that I had better plan on keeping Never Say Never forever...

Pete Meisinger said:

I just received a notice from my auto insurer (American Family) they are sending me a rebate check of $50.00 for every vehicle I have insured with them. They say "less driving, less accidents" as the reason.

I also insure my boat with them. No word on boat insurance though.

My bottom line on boat insurance is this: My boat is owned free and clear. On a good day it isn't worth much, certainly not more than I can afford to loose or walk away from. I have cheap, not very inclusive boat insurance. I figure that my exposure while boating is to other boats I may damage and to fines and clean up should I cause some catastrophic pollution incident. I am well covered from these liabilities. From my own loss, not so much..

pete

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I try not to underestimate the cost of salvage. Government agencies may force removal or send you the bill. Many home auto boat type insurance companies have salvage caps. One limits salvage to $5000. That won’t impress a salvor, he will ask for a certified check, so will his competition.

Companies that specialize in marine policies may cost more until you need them. A $2000 boat costs a lot more when you get a $35,000 salvage bill.

BandB said:

I wouldn't wait on what might or might not happen either. Are any of the others requiring a survey for you to switch? I hate switching insurers but sometimes it's the only choice.

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Yes, both Markel and Geico want a survey.

Ted

FYI - came in last night:


From: Pantaenius USA <usa@pantaenius.com>
Sent: Tuesday, April 14, 2020 9:52 PM
To:
Subject: Notice of nonrenewal for your Pantaenius America clients


Dear Broker,

Please note that your clients’ policies with Pantaenius America will expire on the renewal date stated on the respective declaration page, due to the fact that the lead insurer of the policy, the Allianz Global Corporate & Specialty, has withdrawn from the American marine insurance sector.

In view of the continuing difficulties in the marine insurance market and the problems caused by the outbreak of the Coronavirus, we consider it vital for you to seek alternative insurance solutions for your client as soon as possible.

Be assured that that Pantaenius will continue to work with you to service each account until the policy expiration date.

If you have any questions or need assistance in replacing cover, please contact us at +1 914 381 2066 and have the corresponding policy number available for our sales team to better assist you. We thank you for your understanding and apologize for any possible inconvenience.

Please forward this to all staff members accordingly.

Pantaenius America wishes you a successful and healthy 2020 season.


PANTAENIUS America Ltd.
500 Mamaroneck Avenue | Harrison, NY 10528 | United States of America
Tel. 914-381-2066 | Fax. 914-381-2052 | http://www.pantaenius.com

another one bites the dust???

Pau Hana said:

Hi, Ted,

Last I spoke with my Chubb contacts (last Thursday), there has been no decisions made as to how to handle north/south cruisers.

In a given CAT market (let's use Brownsville, TX to the Atlantic FL/GA border) any insurer limits themselves to a certain capacity of their overall risk tolerance- once that capacity is reached, the insurer may either cease to write additional coverage or offer terms less any wind exposure. These terms can be change by the insuring company at any time. This Covid situation is wholly new territory, and the markets are showing themselves to be fairly flexible under the current circumstances.

I don't think there will be many conversions from north/south to full time CAT unless the situation is greatly extended. The insuring companies, in my opinion, don't want to overexpose themselves in the CAT areas, and a long tern extension would most certainly lead to policy conversions.

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Okay, I'll display my ignorance here. I understand the concept of higher insurance rates in hurricane prone areas, but what, specifically, does "CAT" mean? Inquiring minds want to know!

slowgoesit said:

Okay, I'll display my ignorance here. I understand the concept of higher insurance rates in hurricane prone areas, but what, specifically, does "CAT" mean? Inquiring minds want to know!

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"CAT' is short for Catastrophic damage (also known as a CAT zone)- this is a broad definition for areas of the country that are subject to named storms, earthquake, flood, and other large scale catastrophes.

Example- the generally accepted CAT zone for hurricanes is from Brownsville, TX to the Carolinas from June 1st to November 1st.