How Hurricanes Irma and Maria Dramatically Shifted the Course of Yacht Insurance

By: | February 4, 2019

Lisa Lindsay is the executive director with the Private Risk Management Association (PRMA). She was instrumental in establishing PRMA and played a key role in developing The Chartered Private Risk and Insurance Advisor (CPRIA) certificate. She can be reached at [email protected]

History tells us cycles in the capacity and underwriting appetite for categories of risk are inevitable if you wait long enough. The recreational watercraft market is no exception to this phenomenon, and we are seeing firsthand the impact that unfavorable losses and inadequate pricing have had on the overall market.


Up until recently, the personal watercraft market has been ripe with new entrants aggressively competing for business. Over the years, these new entrants have forced Lloyd’s, a major capacity provider, to chase down premiums in an effort to remain competitive. While the Lloyd’s recreational marine business was not profitable for years, they remained optimistic. That is, until further losses in the wake of hurricanes Irma and Maria required a major course correction for not only Lloyd’s but other insurance providers.

Lloyd’s has dramatically dialed back catastrophe area capacity with upwards of 75 percent of the recreational marine syndicates no longer underwriting business. Key players like Ironshore are either withdrawing from the market or providers like Pantaenius are ceasing to write business in the Gulf, Florida and Caribbean. In addition, many MGA’s have lost their Lloyd’s programs, causing further disruption.

In early 2018, we started to see prices increase and capacity decrease. Many say we have not hit rock bottom and the chaotic space will be with us through 2019. Clients who were used to decreasing premiums every year will experience rate increases. Premium increases for solid luxury yacht risks may get by with a 10-to-15 percent rate increase while watercraft in the Caribbean may experience rate increases upwards of 50 percent.

Navigating the Market

Insurers, program providers and insurance agents and brokers who are successfully weathering the storm are disciplined risk management professionals who have a proven track record of sound underwriting and sense of corporate responsibility, said Richard Smith, vice president of Atlass Special Risks, a wholesale provider that currently maintains their London market capacity.

Sean Blue, global head of Watercraft for AIG, shared that AIG has less of a correction swing to make than others, because they serve multiple segments, are not overly aggregated to CAT locations and have years of solid underwriting and profitable book performance.

Nancy Poppe, North American Yacht practice leader with Willis Marine Superyachts, advised that educating clients is paramount to weathering this storm. Strong relationships with clients, a culture of transparency and partnership with their underwriters has them positioned to favorably assist their client with all their needs. Even with recent rate increases, she is able to remind clients that current rates may still be lower than they were back in 2014.

Market Outlook

While this market correction is causing disruption and chaos, it is not all doom and gloom. The domestic market remains unchanged inland and on the Pacific Coast. Piracy is down so navigation limits are pretty open, and underwriters will look at CAT prone areas where sound risk management practices are undertaken (keeping a boat in a Cat IV-rated building).

Insurers, program providers and insurance agents and brokers who are successfully weathering the storm are disciplined risk management professionals who have a proven track record of sound underwriting and sense of corporate responsibility. — Richard Smith, vice president of Atlass Special Risks

Yards are full of new builds and current owners are still upgrading to bigger vessels, making the market ripe with opportunity.


Center console outboards, the current small market dominator, plagued by a reputation of high thefts and low recovery, is benefiting from new technology and tracking mechanisms that reduce the risk of theft and make them more appealing to underwriters.

Those with an appetite to practice true risk management for their clients, and who look to partner with best in class resources, will find opportunity in the current recreation marine marketplace. Those looking to provide “drive-by” solutions should keep on driving. &

More from Risk & Insurance

More from Risk & Insurance

Risk Matrix: Presented by Liberty Mutual Insurance

10 Severe Weather Risks Affecting Businesses’ Property and More

Every year, severe weather costs approximately $630 billion for the U.S. But this is not a property issue alone; several lines are feeling the strain.
By: | June 1, 2021

The R&I Editorial Team can be reached at [email protected]