Specialty Lines Markets
Recreational vehicles
Land and water
By Larry G. France
Toys, toys, toys. For the most part, unless we own a snowmobile or all-terrain vehicle because we live in an isolated area and need it to get around, we enjoy them as kids enjoy toys. You don’t have to own one of these toys, but they sure to make us feel good when we use them. They come in all shapes and sizes and include personal watercraft, boats and yachts, motor homes, travel trailers and ATVs. The price range for these toys can run from a few thousand dollars to millions.
And the price of these toys and of their operation is on the increase. Let’s start with—you guessed it—fuel prices. The cost of fuel can place the enjoyment of owning a recreational vehicle on hold very quickly. In addition, credit score underwriting can prevent you from even starting to think about becoming a member of the RV family. The current crunch in financing and concerns about the economic future are other obstacles. Adding to these woes is the fact that some national parks and other government-controlled areas have prohibited the operation of such ATVs and PWCs because of environmental issues.
All of these factors will impact the recreational vehicle to some degree, some more than others. At this time of the year, boat and RV shows are in full swing. We will have to wait until these are concluded to see how consumer buying is affected.
Chris Caron, ocean marine and flood manager for MiddleOak, points out that “currently there are 12.7 million registered pleasure boats in the United States. Growth has been relatively stagnant since 2000, compared to the 14% growth rate in the ’90s,” he notes. “Several factors have combined to reduce growth, including oil prices and the rising cost of the boats themselves. However,” he predicts, “based on the current economic industry analysis, long-term growth should bump up to around 14% for the next decade, with most of the growth coming from an aging affluent baby boomer population.”
Caron says that, obviously, fuel prices have had an impact on the boating industry. “Petroleum is the key operating cost for pleasure boats, as well as being a key component in the construction of fiberglass hulls. Fuel prices at the dock pumps reached $5.00 per gallon in 2007 and give every indication of increasing this year.”
The result has been fewer boaters on the water and fewer miles traveled by those who continue boating. “This has put a crimp on marina operators’ revenues, many of which have tried to compensate for the lower gas sales by raising permanent slip fees,” Caron says. He goes on to cite an interesting fact that might help some boaters deal with rising fuel costs. “Some states refund tax paid on gas for boats.” He suggests that boaters log on to www.americanboating.org/fueltax.asp for more information.
Caron continues by pointing out, “As a whole, boating has become much safer, with lower fatalities and accidents down. Statistics show that boater safety courses definitely work,” he adds, “since 70% of the fatalities involve owners who have not taken a boater safety course. Most states now have requirements for boater education courses, which is a positive trend for boat insurance,” he says.
Caron concludes by pointing out that, when looking for coverage, “You need to utilize a program with a company that dedicates resources and has a long-term commitment to marine coverages. Not only do they know which policy forms provide the best coverage,” he continues, “but they also will have an expertise in settling boating claims. Without such an expertise, settlement time can lengthen resulting in frustration for the policyholder and increased costs.”
Thomas Conroy, marine director, Markel American Insurance Company, agrees that safety training is vital. “As a long-term insurer of performance boats, we have found that training and experience are the key ingredients to a good risk,” Conroy maintains.
“Over the years, technology has increased the speed capabilities of this segment significantly. A fast boat used to be able to hit 80 mph; however, now it is 100 mph-plus, with some capable of speeds of 165 mph or more. A few years ago to keep the freedoms of the high performance boating community safe, the Tres Martin Performance Boat School was started. The course is skill-based, intended to educate clients on the proper methods of performance boat handling,” Conroy points out.
“Providing training to ensure competency is a significant advantage towards a safe day at speed,” he continues. “Some manufacturers are recognizing the importance of skilled operations and now are providing the course with the purchase of a new boat.”
Tres Martin Performance Boat School provides three levels of training: Basic Boat Instruction, Performance Class and Ultra High Performance Course.
Conroy says that “feedback provided by our producers paints different pictures of the market depending on the location. In areas where the housing market has taken a downturn, reports are that sales are slower than other areas where the economy is still running strong. While gas prices have increased, boat owners still find time to enjoy the activity they love; however, we have heard that they just don’t run as long as they had previously.
“Those who are unaffected by slight economic changes are buying,” Conroy continues, “and they are buying big. We have heard across the country that boat sales on the higher end are strong.”
The Recreational Vehicle Industry Association supports this anecdotal evidence, pointing out that the “biggest and baddest” and, of course, the most expensive, are where the growth is.
For additional information regarding markets for all types of recreational vehicles, log on to www.insurancemarketplace.com. Select the type, your state and you can hot link to the various providers.
Future Specialty Lines articles include Promotions, Events Prize Indemnity and Weather in April; Social Services in May and The Hospitality Industry for June.