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et us distil it all down. If you go to the pure essence, you will find that unless there is marked change in attitude, and if there are more natural disasters in quick succession, then no one will be able to get marine cover. Yes, the problem is that serious. So, obviously you cannot do anything about the natural disasters, but you can do a lot about taking responsibility for your craft if it is in named peril areas, by performing proper preparation. The insurance market has changed. We knew this was going to come as a result of all of the claims, most specifically out of the Caribbean (Irma and Maria), and for that matter, Cyclone Debbie as well. Typically, Pantaenius came at it from the front foot, with a redevelopment of their product. It meant that their customers could have the kind of cover they have become accustomed to and require. James MacPhail, managing director of Pantaenius Sail and Motor Yacht Insurance in Australia, states, “We have been expecting a crunch for quite some time, and we have been doing our best to educate the market and our client base. The message from us has always been that a policy is where the insured and the company jointly take on the responsibility to secure the asset, and look after the risk.” The world’s underwriters – the ones who carry the financial risk attached to the policy – are moving away from marine risks, because of the storms and other catastrophic events. James says, “One of the largest in the market previously, Lloyd’s, has all but removed itself! A broker’s ability to go to them and place a risk has 95% evaporated. Many companies that have still got cover holder agreements and relationships with Lloyd’s are very unlikely to have them renewed at the end of this policy period.” Storms, however, are not the only ones to blame. The attitude of the insured as to what their responsibilities are in the event of an incoming peril play a significant role. “We’ve been saying it for years, and now a lot of competitors are also saying the same thing, as too is New Zealand’s biggest marine broker all over social media. The world has changed. The market in terms of the number of underwriters available to take on marine risk is something like 35 or 40% smaller today than it was even as close as 18 months ago.” Naturally, this is affecting everyone’s ability to get cover. Even the diligent boat owners are seeing an increase in their premiums and have to bear the costs of the neglect of careless owners, as the insurance funds belong to one big pool.
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No matter whether you are here in Australia, or in Europe or the Americas, in a way, we are all joined at the hip. The reality is that the end underwriter is going to be one of the world’s biggest insurers – namely Lloyds, Alliance, Chubb, Berkshire Hathaway, ING. They will be one of the 10-15 in the group that makes up the significant bulk of the pool we were just talking about. As we can see that there are more catastrophes happening, you will notice that there are less available insurers to take on the risks. Those that are left are much tighter and stricter. Compliance is being enforced, and the expectation JULY - SEP 2019