Insurance entry surveys for boats and yachts
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When it comes to yachts and personal watercraft there are numerous approaches as to which risk management practice may be the best to be used by an insurance organization.
Some insurance providers decide that assessing the risks in relation to a yacht may be an unnecessary or cost ineffective thing to do (until the first claim comes in of course), and in an effort to save from the associated costs and/or look more appealing to potential clients they do not request for an condition survey.
There are countries where holding a valid boat insurance may not yet be required by law. The absence of legislation on a mandatory boat insurance cover, at least for 3rd party damages (similar to motor insurance) means that the boats and yachts which need to hold a valid boat insurance cover are limited to those which need to berth in marinas, conduct commercial activity or those which their owners voluntarily decide to purchase an insurance cover because they understand the dangers associated with boating.
As such all the others buzzing the coastline day and night need not have an insurance cover therefore the fish in the pond the insurance providers fish from gets smaller. Consequently, when fishing in a small pool, the competition becomes harder, and the customer acquisition potential primarily depends on the level of premium and initial costs a boat owner is asked to pay together of course with the risks covered by a policy which is usually standard.
As we all know, a due diligent insurance provider will require the assessment of a risk prior accepting to provide a cover for it. In the case of boats and yachts however, this due diligence appears to be purposely neglected mainly because of financial reasons and more specifically, due to the “burden” an insurance pre-entry survey, the value of which is insignificant compared to the benefits it offers and the potential cost of claims that may come shortly after the commencement of the cover.
One of the contributing reasons to this practice it is the lack of a uniform or standard practice by all the registered insurance providers, to demand pre-entry surveys/risk assessments prior putting a yacht under a policy cover, irrespectively of the size or value. The absence of such a uniform practice, immediately puts those insurers who want to be diligent and apply a risk assessment practice, in the tight spot since the clients will always seek for the easiest and less costly solution to them.
In the short term, those which decide to circumvent the risk assessment may appear being in a favorable position compared to the competition, however most of the times this is a short-lived scenario since eventually the chances are that they can become exposed to claims for which the risk and potential costs have not been accounted for.
In the long run, only those insurers who are diligent and seek to understand the risks associated with an activity and who can adjust accordingly are able to survive, thrive and offer quality insurance covers to their clients.
Understanding the risk
The underwriters should be brought in a position to understand:
- what is the activity they are required to insure?
- what are the risks associated with it?
This is where an independent qualified and accredited marine expert should get involved to assist the underwriter in:
- establishing and understanding the type of risks and the consequent level of exposure to them,
- conduct a condition survey or a risk assessment and explain the findings and item of concerns,
- Recommend actions to have these risks mitigated or controlled.
Just to give a quick example on some of the most common risks involved in boating we have listed the following:
- Outdated charts leading to groundings,
- Lack of navigation lights leading to collisions,
- Modifications to the structure or mechanical parts leading to damages or accidents,
- Bad practices and/or inadequate equipment causing pollution.
- Inadequate experience or lack of license of boat operators leading to damages and injuries.
We, as independent, qualified and accredited marine surveyors are in position to assist any diligent insurance provider in the risk assessment of yachts and other marine assets by providing them with tailored made solutions which match their risk management policy.
For further info please feel free to visit us at www.intermarine-surveyors.com or get in touch with us to discuss further at [email protected]
