A decade of soft market conditions, undisciplined underwriting and underpriced business, coupled with catastrophic losses and increased storm activity, has caused markets to dry up and underwriting to become more selective. (Photo: Subbotina Anna/Fotolia)
The past few hurricane seasons may be a distant memory, but they have left a lasting impact on the marine market. Recreational marine and yacht owners will pay the price for the damage caused by recent major hurricanes and should brace themselves to ride the wave of premium increases. The renewal cycle will not afford them the same favorable pricing, terms and conditions as they had grown accustomed to in previous years.
|How did we get here?
For years, new entrants drove pricing down in order to attract business and gain market share. Popular marine markets like Lloyd's, although unprofitable in this sector for years, continued to write coverage. The company did so while collecting inadequate premiums for the true risk exposure it was underwriting. In the wake of recent hurricanes, increased repair costs and massive losses have caused capacity to shrink, leaving agents and owners wondering about renewal terms and conditions and what price they will need to pay to secure coverage.
Forced to make a course correction, insurers increased premiums 10-15% for favorable yacht risks and 50%+ for watercraft in the Caribbean and other hurricane-prone areas.
Rigorous underwriting from fewer markets requires all hands on deck to help clients navigate the market. Disciplined risk managers and advisors will weather this storm the best.
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