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Specialty Lines Markets Watercraft business Choppy water ahead? By Larry G. France
If you tuned into any media broadcast covering the numerous hurricanes in the past 18 months, you had to notice that Mother Nature decided to create many impromptu dry docks throughout Florida and the entire Gulf area by removing large numbers of watercraft from their moorings and depositing them some hundreds of yards from the water. From the smallest rowboat to large, high-value yachts, hardly any were spared from damage. The number of watercraft damaged or totaled is in the tens of thousands with values that may exceed $2 billion. It is very difficult to imagine that the boating insurance market is not suffering financially, especially carriers that are top-heavy in their portfolio with watercraft policyholders. What will this year bring in regard to pricing and underwriting acceptability? Howard Reiff, executive vice president of Ski-Safe/Sea-Safe, says that expectations are for increasing rates, with certain classes of business facing problems finding coverage. “It would be prudent to expect that the impact of the storms we have experienced will affect marine risks for the foreseeable future.” “In 2005 we witnessed a second consecutive catastrophic season in the Southeast, possibly one of the worst on record, for yacht insurance as well as the broader property lines,” states Cary Breese, president/CEO of Trafalgar Marine Insurance Services. There occurred a record 26 named storms, and Hurricane Katrina alone is estimated by FEMA to have caused $23 billion in insured losses; Wilma an additional $6 billion to $9 billion. Furthermore, 2005 became the first year on record with three hurricanes reaching Category 5 strength (winds over 155 mph). “As everyone knows,” Breese continues, “this year’s hurricane activity follows storm-heavy 2004, another season marked by significant hurricane landfall and devastation in the same region. While just last year many markets were boasting how well they survived the storms relative to their competitors, and many still claimed to retain profitability, similar comments are noticeably absent this time around.” Breese states that “the reinsurers will drive the expected changes in the overall marketplace, and it is anticipated that some reinsurance contracts will be increased by 100% or more and, in some cases, non-renewed. The primary markets have already begun to take rate increases in Florida and the Gulf regions, and we have noted increases by several large carriers in the 25% to 50% range, with more to follow in early 2006. “To the extent hurricane activity can be scientifically forecast, predictions for the next several years continue to be dire. Consequently, it will be interesting to watch 2006 unfurl and observe the free market mechanisms at work, possibly evolving the Southeast yacht market in directions that are as yet unforeseen. We have heard some interesting rumors about creative restrictions being put in place with respect to policy language, as well as talk about alternative risk transfer mechanisms. However, nothing concrete has yet materialized.” Breese says that their team continues to monitor the situation closely and is poised to assist its clients during this difficult market hardening. One thing is certain—as in the property market, the pricing and acceptability of watercraft risks will feel some degree of change through most of the country. It may materialize in the form of very small increases to a tightening of underwriting attitudes. A class of business cannot be pummeled in a short period of time without there being some drastic impact on the way business is done in the future. Upcoming Specialty Lines features include Cyber Liability in March, the Hospitality Industry in April and Special Events including prize promotions, contests and weather coverage in May. The following have responded to our survey and indicated that they are a market for all or a portion of watercraft risks: Arlington/Roe & Co., Inc. Atlass Special Risks, Inc. Bohrer, Croxdale & McAdoo, Inc. An MGA that operates in AR, KS, MO and OK with limits of $1 million. Target class is personal watercraft. Can offer marine operations legal liability. Applications are available online. First Marine (B++), Markel (A) and Essex (A) are the carriers. Bruce V. Schneider Associates, Inc. A wholesaler, MGA and E&S broker that operates in all states with various limits and supplemental excess if required. Target markets are all classes of private pleasure boats including high performance or specialty product, commercial marine (standard and nonstandard), and all cargo classes. Can offer umbrella coverage, bumbershoot, P&I and GL. Numerous A rated admitted and nonadmitted carrier are used to place coverage. The Colonial Group, Inc. An MGA that operates in GA, NC, SC, TN and VA. Target classes are pontoons, powerboats, personal watercraft, and yachts not exceeding $300,000. Will not consider boats with speeds in excess of 80 mph. Can offer watersports liability, uninsured watercraft and non-owned watercraft liability, towing/emergency assistance, ownership experience and renewal discounts. American Modern (A+) and American Reliability (A-) are the carriers. Evolution Insurance Brokers (EIB International) An E&S broker that operates in all states with all limits. Will consider any class. Prime Insurance is a B rated carrier. Foremost Insurance Group of Companies An agency (Foremost Family Boaters) that operates in all states except FL with limits of up to $500,000 liability and $200,000 hull. Target class is pleasure boats up to 26 feet in length. Will not consider high-performance craft. Can offer hull, liability, medical payments, uninsured watercraft, trailer, towing, and personal property. Foremost Insurance is the carrier. Global Marine Insurance Agency An agency/E&S broker that operates in all states except AK, FL and HI with unlimited hull limits and unlimited P&I liability. Target classes are pleasure yachts/boats, commercial marine, rental fleets, ski boats and private ski lakes. Can offer fishing equipment, medical payments, personal effects, towing and pollution/spill liability. All carriers are A rated. Marine Underwriters Agency, Inc. A wholesale broker that operates in the eastern 40 states with unlimited limits. Can offer boat and yacht. All domestic carriers are A rated. Markel American Insurance Co. An insurance company that operates in all states with specialty limits of $750,000, hull; and $1 million, liability and yacht limits of up to $45 million, hull; and up to $10 million, liability (P&I). Target markets are specialty: high-perfor-mance and ultra-high-performance including catamarans, airboats, troubled operator, specialty and standard boats under 26 feet, and specialty commercial, including rental operations; and yacht: midrange yachts 26 feet to 75 feet, owner-operated for pleasure use. Will not consider PWC rentals in FL. Can offer uninsured boater, medical payments, towing, personal effects, tender, and rental reimbursement. Markel is rated A. Midlands Management Corp. An MGA that operates in all states; call for details regarding limits. Target classes are yachts and pleasure boats. Will not consider boats exceeding 70 mph. Can offer hull, P&I, personal property, trailer, pollution liability, and non-owned boat liability. National Interstate, Old United, and London are the carriers. National Marine Underwriters, Inc. An agency that operates in all states except AK and HI with limits of $400,000. Target classes are personal pleasure craft and recreational marine. Will not consider wooden boats. American Modern is the A+ rated carrier. Old United Casualty Co., dba Vantage Casualty Co. in CA An insurer that operates in all states except AK, FL and HI with limits of (boats): $75,000, hull; and up to $500,000, liability for watercraft 26 feet or less and less than $75,000 in value, (yacht): $2 million, hull; and up to $1 million for P&I. Target classes are (yachts): freshwater or saltwater but none moored full time south of the VA/NC border, (boats): including bass boats and personal watercraft. Will not consider commercial exposures (except six-pack fishing charters); boats which exceed 65 mph (except bass boats up to 80 mph); and yachts which exceed 55 mph. Can offer emergency towing and assistance, medical payments, uninsured boaters coverage, personal effects coverage and for yachts only: underinsured boaters coverage and Longshore & Harbor Workers coverage. Pacific Specialty Insurance An insurer that operates in all states with limits of up to $500,000 CSL. Will write PWC only. Can offer medical payments, watersports liability and physical damage. Pacific Specialty is rated A. Prime Insurance Syndicate Inc./I.E.B.S. An MGA (IEBS)/insurer (Prime) that operates in all states with unlimited limits. Will consider any class. Prime is a B rated carrier. R.E. Chaix & Associates An E&S broker that operates in CA only with limits of $25 million. Target classes are worldwide navigating and hard-to-place insureds. Will not write high-performance or personal watercraft. Can offer private pleasure with permission to charter, port risk, builders risk and pollution. Carriers are Northern Assurance, Essex, and Lloyd’s. Robert A. Schneider Agency An MGA/E&S broker operating in IA, MN, ND, SD and WI with liability limits of $1 million and hull limits of $500,000. Target classes are high-performance up to 120 mph, older boats, boats with activity or no previous insurance, jet skis, airboats, hovercraft, and commercial exposures (charters, rentals, tours, and boat and yacht clubs). Will not consider hydro racing. Can offer medical payments and uninsured/underinsured. Markel is the carrier. Russell Bond & Co., Inc. An MGA/E&S wholesaler that operates in CT, MA, NJ, NY, OH, PA and VT with limits of up to $50 million (hull values up to $20 million). Target class is all types of watercraft including powerboats, speeds up to 55 mph (special rates for bass boats); sailboats up to 45 feet; corporate titled; multi-owner; and wood boats. Will not consider jet skis or houseboats. Can offer uninsured boaters, pollution & spill, towing & labor, waterski liability, personal effects and miscellaneous equipment. All carriers are rated A+. Seahorse Underwriters An MGA that is licensed and admitted in all 50 states with limits of $5,000 - $1 million-plus. Target class is pleasure boats. No minimum premium requirements, no contract required, direct bill, online quoting available. Will not consider charters. St. Paul Fire & Marine is the A+ rated carrier. Ski-Safe/Sea Safe An MGA that operates in all states with limits of $5 million, hull; and $5 million, P&I (higher limits also available). Target classes are small boats, PWCs, yachts, performance boats, ski boats, bass boats, antique boats and houseboats. Will not write live-aboards or charters. Can offer agreed salve hull, Jones Act, Longshore & Harbor Workers; can also offer coverage for P&I only. AXIS Re is the A rated carrier. Surplus Ins. Brokers Agency, Inc. An MGA that operates in IL, IN and MI only with limits of $300,000. Target class is personal watercraft and boats. Will not write watercraft with more than one owner or corporately owned watercraft. Can offer jet ski. American Modern Home is the A+ rated carrier. Thum Insurance Agency, LLC An agency that is licensed in all 50 states and provides boat insurance nationwide. Will not write racing boats. Can offer replacement or stated value as well as a wide range of optional coverages. All carriers are A rated. Trafalgar Marine Insurance Services, Inc. An MGA/E&S broker that operates nationwide with P&I limits of $50 million and hull limits of $50 million. Target class is all marine risks, especially pleasure craft, marinas, cargo, boat dealers, and ship repairers. Will not consider non-marine risks. Can offer live-aboard, extended navigation, MOLL, SRLL. ACE (A), AIG (A+), American Reliable (A-), CNA (A), Essex (A), Fireman’s Fund (A), Great American (A), Navigators (A), and Zurich (A+) are the carriers. U.S. Insurance Services, Inc. An MGA that operates in FL, GA, NC and SC with liability limits of $500,000 CSL and boat hulls up to $200,000. Target class is boats from 17 to 32 feet only. Can offer agreed value and replacement cost. American Reliable is the A rated carrier. Western World Insurance Company An insurer that operates in all states with GL limits of $1 million/$2 million. Target market is smaller, lighter risks; will write some whitewater risks. Will not write jet skis, diving risks or ocean exposures. Can offer GL, property and floaters. Western World is an A+ rated carrier as is Tudor. Zurich Marine Specialty A yacht insurer that operates in all states with limits of up to $750,000 hull, and $1 million P&I. Target classes are yachts over 26 feet in length only and with a hull value that does not exceed $750,000. Can offer tenders & dinghies, marine electronics, uninsured boaters and hurricane protection. * |
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