|
SPECIALTY LINES MARKETS
Building nautical knowledge
Tapping into boat insurers' expertise creates long-term opportunities
By Dave Willis
“Boats aren’t selling,” says Bob Kinsey, president of Marine Underwriters Agency in Pawleys Island, South Carolina, “and people aren’t using their boats anywhere near as much as they used to.” Boating-related businesses have certainly felt the impact of a tough market.
The economy is taking its toll on boat insurance, too. “At renewal, customers are very interested in reducing premiums as much as possible,” notes Damon Hostetter, senior vice president, ACE Recreational Marine Insurance, in Philadelphia. This may take the form of reviewing options, such as higher deductibles, lowered hull values and overall policy reviews.
Chris Pesce, president of Maritime General Agency in Westbrook, Connecticut, notes, “It’s not uncommon to see an application for a $250,000 boat, yet a market search for comparable boats finds listings for $140,000.” Kinsey sees customers trying to save with port-risk only policies, as well.
One positive: “There are fewer claims,” he adds. Lack of broad, major storm activity for several years and the fact that more boats are dry-docked has led to this. That said, Florida and Gulf risks are tough to write.
“Florida has been a difficult market since the 2005 hurricane season,” says Randy Troutman, owner of LaGrange, Kentucky-based United Marine Underwriters. Carriers establish parameters there, including boat age and absentee owner restrictions, that don’t exist elsewhere, he adds.
Devil in the details
For retail agents seeking to serve the market, Kinsey has some seemingly obvious advice. “The best advice I could give would be to complete the questionnaire or the application completely,” he says. “Without the information, companies won’t quote.”
John Beachley, Annapolis, Maryland-based regional manager for International Marine Underwriters, a OneBeacon company, agrees. “The more complete the app, the better,” he says. “For instance, the more thorough producers are with hurricane plans in CAT-prone areas, as well as operator experience and loss history, the easier it is to get the submission through.” Adds Matt Anderson, president of Global Marine Insurance Agency in Traverse City, Michigan, “Agents that provide good, sound, detailed applications have the best chance of obtaining quotes from more sources.”
An overriding concern for underwriters is boat user experience. “Is the person qualified to run the boat they have or are getting?” is how Kinsey describes it. Adds Pesce, “Insurance companies tend to scrutinize first-time boat owners pretty closely.” But, he adds, research indicates loss activity is markedly higher for long-time boat owners moving to a different—often more complex or faster—boat, as well. “It seems to be related to the learning curve on the new boat.”
Non-marine history comes into play, too. “The more you know about your insured and his history of operating vehicles, including motorcycles or cars, the better job you can do for your client,” explains Greg Gutchigian, New York-based yacht product line officer for OneBeacon’s International Marine Underwriters.
While the “complete application” advice seems obvious, it takes more than just filling in blanks. Agents must know what to ask. As Kinsey notes, companies often make credits available to more experienced and loss-free boat owners.
Troutman concurs. “Gathering data is challenging for agents who don’t write much boat business,” he says. “They’re not sure what’s needed. Some answers can automatically eliminate a company or substantially increase premium.” Also, an incorrect answer could generate a bad quote, something that often comes back to bite agents later.
It helps to know company appetites. “Guidelines differ from one company to another,” notes Beachley. For instance, many companies prefer newer boats. “They’re more acceptable in the standard markets in non-CAT-prone areas,” he adds. “That said, thorough hurricane or contingency plans could improve the risk’s attractiveness.”
Anderson says the quest for info begins with the boat. “Get the boat value and know where it will be used,” he explains. “Will it be just in the lakes or will it go out on the ocean? How far up and down the coast will the client use it? The farther out it goes and the farther up and down the coast, the higher the premium.”
Ask about use, as well. “Is it going to be a charter fishing boat or just for personal pleasure?” is another question Anderson says needs to be answered. “Engine horsepower is also important, so we can calculate potential speeds.” Often missed in the sales process are liability limits and whether pollution and spill coverage are included. “Also, it’s important to have sufficient coverage for on-the-water towing in case of mechanical failure or running out of gas,” he adds.
Michael Terrier, senior underwriter at Maritime General Agency, recommends including details of prior boating training that might yield additional credits, as well as anti-theft alarm devices, electronics, correct navigation and more. “In the Northeast, for instance, a lot of boats are laid up,” he adds. “If agents don’t share that information, premiums could be affected.”
“We look at absentee-owner plans,” Beachley notes. “What is being done to protect the boat if they’re not close by all the time? Also, older boats normally require surveys of condition and value completed by company-approved surveyors.”
As a former recreational marine agent, Hostetter notes that not all risks are “plain vanilla. There may be some peculiarities,” he explains. “Good specialist agents will dig deeper and ask questions to fully understand what the customer wants to accomplish. Fully explaining the situation to the insurance carrier may show how a risk might be acceptable.”
He recalls working with a 70-something couple who wanted to cruise to the Canadian Maritime provinces—something that, at first blush, raises red flags for underwriters. “But the gentleman had sailed around the world and the couple had been doing this their entire lives,” he notes. “That was the story behind the story.” And when such stories are told—often in a brief e-mail cover note or accompanying narrative—risks can become very acceptable.
Terrier encourages retail agents to be advisors to their insureds. “As soft as the market is, everyone is focusing on the cheapest rate, rather than adding value,” he says. “A good agent or broker knows policy and coverage differences and can advise insureds a little better.”
Pesce warns, “A lot of products on the market right now are sub-par—limited in terms of machinery coverage, mechanical breakdown, latent defect exclusions, manufacturer defect exclusions and so on.” Watch out for that.
Good offense, good defense
Despite the challenges, often brought on by unfamiliarity, there’s good reason to pursue boat business. When Troutman worked as a retail agent, he found that if he insured the boat, chances are he’d have a shot at other business.
Anderson adds, “With yachts, you’re often looking at high-net-worth earners—people who might have more than one house and multiple cars. They’re generally good risks to pursue.”
There’s good reason for retail agents and CSRs to get over their fear of the business. “Competitors can use the boat as an entry to other business,” Kinsey warns. “Don’t be afraid. If nothing else, try to get a copy of the person’s dec page, pick it apart and see if there are weaknesses or missing coverages.”
Troutman stresses the importance of agents partnering with specialists whom they feel comfortable with, and ones who know the risks and the products in the market. Adds Anderson, “We deal with agents who may insure someone’s business or home and auto, and they’re looking to round out the account, but they may not be well-versed in watercraft risks.” Specialists can search the market for the best solution, offer a number of quotes and options, and bring retail agents up to speed on coverages, he adds.
Ease of doing business can be part of the mix. For instance, Troutman’s firm offers agents a Web-based quick-quote system that takes data that will affect the premium and provides a quick indication of appetite and likely premium. “The site even provides ‘live help’ buttons for quick answers to agent questions,” he notes.
Anderson’s firm complements its online quoting system with online information on completing apps. “The system can deliver several quotes for agents to review and request a binder on,” he explains.
In today’s soft market, Pesce suggests that there may be value in trying to up-sell coverages, such as personal effects. “That would be an opportunity to make up for other premium decreases,” he explains.
Hostetter recommends that retail agents spend time cultivating referral sources. “If an agent is getting business from surveyors, boat dealers or lending institutions, visit them, talk to them and educate them,” he explains. “Oftentimes, insurance is a mystery to them. Use education as a means of staying foremost in their minds without being obtrusive.”
“It’s a tough market,” Beachley notes. “Agents just need to keep persevering. The market will be back.”
|
