You probably wouldn't expect a Midwestern agency to cover yachts and megayachts in Florida, but that's how things are at Miles & Finch. Our $65 million (premium volume) book of business includes many commercial accounts. The owners of some of these businesses are quite successful and can accommodate a lifestyle that includes pleasurecraft kept year-round in warm-water ports. Since we insure their business, they often ask us to take on their personal-lines needs, including their yachts.

In fact, we have quite a bit of boat and yacht business. In terms of numbers, much of it is written here in Indiana and the Midwest. In terms of value, however, a disproportionate part of the book is located in the Sunshine State. In this article, I'll explain how we accommodate both ends of the boat and yacht market.
All such business is handled by our personal-lines department, which I direct. It writes about $7.5 million in premium volume and operates as a separate profit center. While doing its own prospecting and marketing, the department also receives referrals from commercial-lines producers. Our department has six customer service agents, who handle call-in and walk-in business, and cross-sell existing clients. We have one outside personal-lines producer.
We write insurance for many boats in Indiana, Michigan, Kentucky. These are mostly small craft used for fishing, water skiing and other recreational purposes. We write such coverage as part of our effort to round out accounts. Most of this coverage takes the form of personal-lines boat policies; some of our insurers even write it as part of a personal-lines package policy. A relatively small part of this business takes the form of yacht insurance, ocean-marine forms that typically are used to cover watercraft longer than 26 feet. Our CSAs have authority to bind such coverage for boats up to 40 feet in length.
Our marketing for small-boat insurance is seasonal. In winter, hardly anyone requests the coverage. But come April, when the boat shows start, we get a lot of inquiries. Consequently, we send letters to personal-lines clients at that time of the year, letting them know that we can cover boats if they happen to buy one. We also mail clients checklists that address all the coverage needs they may have–including boat and yacht insurance. That sometimes triggers inquiries.
We also go through the coverage checklist with new clients. Often, they don't think to mention any boats they own, especially in winter. The checklist forces them to think about such property, so we can cover it on the spot or provide a competing quote when the current coverage comes up for renewal.
In the past, our efforts to promote boat insurance have been fairly limited; e.g., participating in boat shows in Indianapolis. We plan to start marketing the coverage more aggressively, however. At the first of the year, Miles & Finch was purchased by Regions Insurance Group, and our new owner brings to us expanded marketing tools and opportunities. For example, we will be able to place advertising for boat insurance (among other personal-lines coverages) in the branch offices of Regions Bank, an affiliated business. People who come to the bank to obtain boat loans may see our ads and call us for coverage.
We also are thinking of creating affinity groups centered on boat and yacht insurance, if we can find suitable organizations, like yacht clubs, to work with. We've had great success using affinity groups–including organizations representing teachers, doctors, accountants and bank employees–to sell auto and homeowners insurance, and we think the same approach could work well with boat and yacht insurance.
We also write insurance for a significant number of yachts and mega-yachts. (While there is no precise definition of the latter term, it generally refers to boats worth more than $1 million that have at least one full-time captain or crew member.) Much of this business is written for watercraft kept in coastal areas. At the top end, we insure perhaps 10 to 15 vessels worth more than $800,000. The largest one we cover has a value of about $2.5 million. Unlike with boat insurance, yacht insurance sales don't follow any particular pattern. Inquiries can come at any time, even in December in connection with–believe it or not–a Christmas gift.
Leads from commercial-lines producers
The large yachts and megayachts come to us almost exclusively through our commercial-lines producers, who refer their clients to us. The producers can be as involved as they want to be in the data gathering and proposal presentation. Some turn the entire matter over to the personal-lines department; others do nearly everything themselves. Either way, the commercial-lines producers do not share in yacht insurance commissions.
Since these clients already have a business relationship with us, they expect us to handle their yacht-insurance requests in stride–even when they give us little or no advance notice. For instance, a client may see a yacht at a boat show, buy it on the spot and only later think to call us.
Sometimes we have to deal with un-usual circumstances. For instance, one client recently had a $900,000 yacht built for him, which raised some “builders-risk” type issues. The boat builder wanted our insured to assume responsibility for insuring the hull when the boat was 50% complete. Acting on our advice, our client negotiated to have the yacht builder cover the vessel until it was actually in the water.
Another twist on this account was that, after the yacht was finished, we were notified that our client (or rather his captain at the client's directions) intended to take the boat out before a marine surveyor or anyone else had an opportunity to inspect it and give it a certificate of seaworthiness. Luckily a specialty MGA that we use to place yachts (Global Marine Insurance Agency, in Traverse City, Mich.) knew the builder and was able to get enough information from the firm to place coverage for the yacht before it departed the shipyard.
For yachts moored in Florida and other parts of the Southeast, hurricanes are a big concern to underwriters. Particularly in the last couple of years, they've started asking applicants whether they have full-time captains who can move the boats quickly in the event of approaching storms. If not, insurers want to know where the owners live, and what their contingency plans are. In the event of an approaching hurricane, can they get to the boat to move it? Will someone else move the boat?
We insure quite a few “absentee” yacht owners. They may live in the Midwest, for example, while keeping their yachts at Florida marinas. I recall asking one such client what provisions he had made for his 65-foot Florida-based yacht. “None at all,” he replied, adding, “I'm not going down there” in the event of a hurricane. Eventually, however, he agreed to make arrangements to have someone move the boat out of harm's way, should it become necessary to do so.
Insurers used to be content to have a boat pulled out of water and put under cover when hurricanes approached. Depending on the value of the boat, that's often not enough these days. Besides, it might not be practical (or even possible) to take a megayacht out of the water, so provisions must be made to move it elsewhere. Sometimes marinas or local yacht clubs can provide this service. Occasionally, however, yacht owners remain adamant about not moving their watercraft. In that case, the insurer may underwrite the marina where the yacht is kept.
Other information we may need for the submission includes the credentials and work history of the yacht's captain, if there is one, and any crew members. For yachts with full-time captains and crews, we may sell Longshoremens and Harborworkers Compensation Act insurance, the marine equivalent of workers compensation insurance.
We also include a copy of a yacht's marine survey with the submission and the surveyor's certificate of seaworthiness. Underwriters increasingly are asking for updated surveys on yachts that haven't had one for a while. The yacht owners pay for them. They're not cheap, although they cost less when conducted by the marine surveyor who made the original inspection. Regardless, the cost is rarely an issue.
Perhaps surprisingly, coverage for megayachts doesn't vary greatly from market to market. Since price usually isn't the main factor in the sale, coverage tends to be quite comprehensive, regardless of the insurer that provides it. For example, coverage for travel to and from the Caribbean, which for most yachts is added by endorsement, is almost always provided automatically in policies written for large yachts and megayachts.
Clients must complete an annual update questionnaire prior to renewal. We typically telephone the yacht owner or captain for the required information. Underwriters want to know if there have been any major changes in the use of the boat–e.g., if it is used for chartering–whether the owner or captain has been arrested for speeding (in an auto) or for any other offense. Renewing coverage usually is routine, unless there has been a claim or incident. Occasionally, for instance, there may be a fire in an engine room. Claims more often result from carelessness, however–inadvertently running into a dock, for example.
We have a variety of standard markets for our Midwestern boat business. For such watercraft that for some reason those markets won't accept, we turn to MGAs like Arlington-Roe and Burns & Wilcox. For Florida-based megayachts and the like, we work with Global Marine Insurance Agency and a couple of other specialty markets.
Although Miles & Finch is a fairly large agency, we don't think we're that unusual in regard to the composition of our book of business. All agencies with a mix of personal-lines accounts and mid-market commercial-lines clients should be prepared to work both ends of the boat and yacht market. By doing so, they can round out accounts and increase client loyalty–and sail away with some significant commissions.