UK specialty marine insurance is being pulled in opposite directions, softer rates on one side, rising repair costs, climate pressures, and geopolitical risk on the other.
Claire Hoole, broker at Circle Marine Insurance Services, said the hull and machinery market in London is already seeing rate softening. But that’s not necessarily good news for brokers or clients.
“That’s largely down to new insurance firms, often outside of the UK, coming into the market, usually via private equity or investment,” Hoole said. “They think it should be pretty easy, should be pretty profitable. But they might not have the knowledge or experience to do it sustainably.”
In a market where a scratch on a superyacht bathing platform can cost upwards of £50,000 to repair, Hoole said unsustainable rates create real risk. “It will ultimately leave clients in a vulnerable position if brokers are placing business purely on price, not looking at the quality of the cover and the ability of the insurer to pay claims,” Hoole said.
The cost of marine claims has climbed steeply since COVID. “The cost of materials has gone through the roof. There are supply chain issues, and insurers are struggling to find decent boatyards or experienced loss adjusters in remote locations,” she said.
These delays are compounded when incidents happen overseas. “The pool of experienced surveyors seems to be shrinking, which is a bit worrying,” Hoole said.
At the same time, reinsurance costs are rising. “The rates will have to go up, otherwise I don’t know how there’ll be enough money in the pot to pay everything out.”
In marine trade insurance, underwriters are digging deeper into builder’s risk exposures, especially for high-value boats under construction.
“They want to know the maximum any one vessel and the maximum in build at any one time,” Hoole said. “If there was a fire and the whole lot got taken out, they need to know the correct values are in place.”
Other underwriting concerns include health and safety, fire management, and whether clients are using reputable yacht designers with adequate insurance. “If the design fails, that claim could fall back on the designer,” she said.
Brexit has also sharply reduced the number of markets UK brokers can access for EU-based superyacht owners. For UK clients, there is still cover, but it comes with conditions, such as more regular out-of-water surveys, tighter scrutiny on crew liability, and restrictions around charter use.
As geopolitical instability grows, war risks and piracy cover are becoming more restricted. “Rates will be going through the roof,” Hoole said. “Insurers don’t want to write these risks, but someone has to, so they’ll charge properly and reduce their exposure as much as possible.”
Insurers are increasingly cautious about extending cover to high-risk regions. “Even in places like Turkey, some owners are purchasing standalone kidnap and ransom policies just in case,” she said.
In a market squeezed by both rate competition and claim inflation, brokers are under pressure to present risks thoroughly and guide clients carefully.
“We want to present a risk in the best possible light to an insurer,” Hoole said. “We can’t misrepresent, but we can help them understand why the positives outweigh the concerns.”
For clients tempted by cheaper quotes online, she offered a warning. “It’s our job to identify the gaps and explain what’s fit for purpose and what isn’t,” she said. “Because when something goes wrong, that’s when the cover really matters.”
