Hurricane Ian Ripple Effects: Questions for the Professionals on the Forum

[Hydraulicjump]

Starting a new thread here, with apologies to the other two. I have spent many a winter/spring in that area messing around in a friend's boat chasing snook and redfish. This is heartbreaking to watch. Amazingly, we think his house on Useppa survived along with his boat. But...
For the professionals in our group. Question 1: how do you think Ian will impact the overall boat insurance industry. There is the real possibility that this will be the most boat-damaging hurricane in history (dwarfed by the structural and infrastructure damage of course). What happens after an event like this? Bankruptcy, consolidation, increase in national costs, or thanks to the reinsurance industry and hurricane restrictions on policies, nothing? We certainly have plenty of recent examples in Florida to test this: Charley , Ivan, and Jeanne (2004), Dennis and Wilma (2005), Irma (2017), Michael (2018) and now Ivan, so far (2022). Just curious what happens since all of us to one degree or another carry insurance.

Question 2, the boat market is already pretty tight with long wait lists for new builds and crazy prices. What happens when this much potential inventory gets wiped off the market? Or will there be a fire sale of salvaged boats. Again, lots of Florida experience to call on here.

Thanks.

Apologies for starting a new thread, but I know there are lots of professionals who lurk on this site and lots of regular members with direct experience and memory from the eight major hurricanes that have hit Florida in the last 18 years.

 

[DDW]

I'm curious as to what insurance people had, and how much will it cover. The insurance I had when my boat was in Florida did not cover named storms. If I wanted named storm coverage, the premium was approximately 10% of the agreed value yearly. So either there are insurance companies with much more liberal policies, or many of those boats will not be covered?

Any large loss by an insurance company is made up with premium hikes. So another question is will those hikes be spread across the country to places that have no hurricane risk, or be kept local to the risk?

 

[Alaskan Sea-Duction]

Folks on the west coast will see their insurance premiums increase dramatically to cover the costs of Ian.

 

[O C Diver]

As far as insurance goes, I expect to see costs increase but this wasn't prime season. Many marinas were half or less full. If this had happened in January, the boat carnage could have been double or triple. There are also some amount of boats that choice not to have named storm insurance. Don't know if that includes wreck removal of no coverage at all. It would be interesting to know what percentage of the boats weren't covered for this and how many of our size boats the insurance companies had to pay for.

Ted

 

[SoWhat]

I agree that named storm coverage is probable minimal if the number of homeowners with flood insurance coverage is any indicator. (I believe 13% of homeowners have flood insurance)

Sailorman's consignment store is going to double their business. Fiberglass repairs will be a growth industry for the next few years. Manufacturers have finite capacity so they are still in the drivers seat but I would suspect recession clouds will damp any thoughts of price or capacity increases. Used boat market in FL should see a lot of churning. People who lost a boat want another one. People with cosmetic damages will want repairs. People who have a boat want to sell before next hurricane. Spin the wheel a few times.

 

[sunchaser]

Regarding insurance, the bigger question is housing in the high risk areas lying 10 feet or so above "normal" tide level. We intentionally bypassed FL and the Gulf Coast as retirement and boating possibilities for the very reasons insurance companies are raising rates and or fleeing these areas.

if one were to be satisfied with living inland in FL and having a trailerable 30 footer or so, it is a different story.

 

[O C Diver]

Regarding insurance, the bigger question is housing in the high risk areas lying 10 feet or so above "normal" tide level. We intentionally bypassed FL and the Gulf Coast as retirement and boating possibilities for the very reasons insurance companies are raising rates and or fleeing these areas.

if one were to be satisfied with living inland in FL and having a trailerable 30 footer or so, it is a different story.

When I was in my 20s, I owned a home in a low area that was subject to a wet yard during the once every 10 year storm. Vowed never to do that again.

My current home in Fort Myers is 7 miles from the Gulf or a river. Between elevation and distance from the Gulf you can pretty much eliminate the storm surge. Wind is a different issue. Rightly or wrongly, the news features the homes that were damaged or destroyed, not the overwhelming majority that had minimal (comparatively) damage. Of the 70 homes in my neighborhood, there are a few 20 year old roofs that will need to be repaced, lots of landscaping, and one screened pool enclosure. Probably less than 10% would meet their insurance deductible.

Now if you want to live in the Fort Myers Beach area, where your backyard is the Gulf of Mexico, it's not if, but when.

Ted

 

[Larry M]

Typically there isn’t a fire sale on salvaged boats although there will be a few. When Irma hit Key West, salvage companies came in with cranes and barges. They ended up in landfills crushed. The salvaged boats were of too little value for the time it takes to recover. Boats that weren’t totaled, took up the available boat yard space and personnel for insurance or deep pocket repairs.

 

[Benthic2]

How do they handle claims if I say my neighbors boat broke free and blew into mine. If not for his boat I would have been ok ?

....or in the case when the docks fail, does the marina have any liability...ie: if the docks help up my boat would have been fine.

 

[Larry M]

How do they handle claims if I say my neighbors boat broke free and blew into mine. If not for his boat I would have been ok ?…

If you have insurance, your insurance company will pay you and then your insurance company will subrogate against the boat or their insurance company.

Here you go, not my words but I know it works from experience on another boat we owned:

“Simply put, subrogation protects you and your insurer from paying for losses that aren't your fault. It's common in auto, health insurance and homeowners policies. It lets your insurer pursue the person at fault to recover the money paid out for a claim that wasn't your fault”.

 

[SoWhat]

How do they handle claims if I say my neighbors boat broke free and blew into mine. If not for his boat I would have been ok ?

....or in the case when the docks fail, does the marina have any liability...ie: if the docks help up my boat would have been fine.

The very very fine print in my license agreement states "it is agreed that the boat...stored on the premises...is... at the sole risk of the licensee. The licensor...will not be liable for any loss or damage to property under any circumstances, including losses caused by...any negligent acts or omissions of the licensor not amounting to gross negligence..."

The agreement goes on to state "The licensee will be held responsible for any damage caused to other boats...or to the structure or facilities of the licensor."

In other words the marina is going to sue you and you are going to sue your neighbor, and the lawyers will have a profitable year.

I suspect many marinas will be named insured so they will be first in line to collect on any claims made against your policy.

 

[Hydraulicjump]

Thanks for the input everyone. There is a raging discussion in the media about how only 18% of Florida homeowners who should have flood insurance actually have it and how new federal rules caused a bunch to drop it. And how a number of insurers just left the state and stopped writing policies. This is going to make the recovery even slower.


This has become a big issue in California where we are seeing lots of people drop flood insurance because it has been so long since the last one that they have assumed they have no risk. Wrong.



Also here in California, due to a convergence of historic mistakes, bad choices, and some things beyond our control, wildfire damages have become so high insurers have bailed everywhere, forcing people into the high risk pool--where premiums quadruple--or, as so many have done, you just drop the insurance even though you live in a tinderbox. We jokingly refer to this as the Dirty Harry approach to risk management: "you feel lucky punk? Do ya?"


And all this made me look closely at my insurance, which has real clear restrictions on how far I can take the boat in the PNW for specific times of the year. We don't get hurricanes here, but we do get pretty stout storms called "atmospheric rivers" and they can raise heck.


Finally, I looked at the endorsement for my marina, Elliott Bay Marina. Sure enough, in the fine print it says "Inclusion of the additional interest shall not waive any right of subrogation we may have." Then why bother with an endorsement? Most important, I am now trying to find a way to drop "subrogation" into a casual sentence to impress my friends.

 

[Simi 60]

Folks on the west coast will see their insurance premiums increase dramatically to cover the costs of Ian.

Seems we get premiums increase massively in Australia because of boat losses in the US.

 

[Kuncicky]

Seems we get premiums increase massively in Australia because of boat losses in the US.

For real???

 

[Mermaid]

If you have insurance, your insurance company will pay you and then your insurance company will subrogate against the boat or their insurance company.

Here you go, not my words but I know it works from experience on another boat we owned:

“Simply put, subrogation protects you and your insurer from paying for losses that aren't your fault. It's common in auto, health insurance and homeowners policies. It lets your insurer pursue the person at fault to recover the money paid out for a claim that wasn't your fault”.

Except that....many states have a “force majeure” statute which means that in the event of an “act of God” or “nature”, you can’t bring a claim against another for damages caused in such a catastrophe. At that point, your insurance just pays you and moves on without a subrogation claim, depending on your state’s law.

During Hurricane Irma, I was in Miami (still am) where we don’t have enough real estate to haul out all the boats that reside here. Getting hauled out became a bidding war and there is a $hit ton of money in Miami. I had to do the best I could. My neighbor was one of the fortunate (wealthy) ones who won a spot on land, so he bugged out. An uninsured guy with a fishing boat he chartered pulled in next to me to ride out the storm. He told me he chose that slip because he could use my boat as a “wind shield.” Mine was a 58’ Hatteras motor yacht. He had a 45’ sport fish. I told him that was a really bad idea and that he should not be in another person’s slip. He was cocky and believed that my boat was going to protect him. Well...we all lost. I was insured; he wasn’t. He wanted me to personally pay for his damages since the wind came from that direction for a while, yet it came from the other direction for a while, too. He kept telling me that my boat ran into his, yet my boat was still in her slip. I tried to explain the concept of force majeure to him, but he was having no part of listening to that, so I told him to go pound sand and reminded him that his attorney’s fees would run out long before mine would (I’m in the “business”). He actually threatened me in the parking lot in front of other witness. He really shouldn't have done that. He’s gone now.

 

[Mermaid]

Seems we get premiums increase massively in Australia because of boat losses in the US.

Wow, that is surprising. I never would have guessed that. I would have gotten that answer wrong on a quiz, for sure.

 

[Simi 60]

For real???

Multiple articles across the interwebs similar to this

https://www.admiralyacht.com/admira...sing-within-the-global-boat-insurance-market/

In 2019 one of the biggest marine insurers lost Lloyds as an underwriter and went with Berkshire Hathaway/Chubb.

Our full comp insurance premium went up 400% and deductable went up 700%
We have never made a claim in the prior 30 years.

Needless to say we went else where, but that year in between we were forced to accept 3rd party only and it was still 60% higher than the prior years full comp.

The insurer we use now for full comp is still around 200% higher than our 2018 premium but the deductable is down to a normal amount..

Every week over here on various pages there are boat owners asking about insurance, getting very difficult and expensive now and increasingly restrictive.


So while I genuinely feel for those who have had damage or loss who have made a real effort to secure or move your vessel to a safe cyclone hole, the rest of you who couldn't be bothered and say, "it's ok, insurance will sort it out" well..........<insert rude words here>.

Seems to be a lot of people these days who simply do not care about learning the skills or using common sense, they are only playing boats for a few years before doing something else so insurance will pick up their slack.

Again, for those who actually give a fk and do the right thing,, or at least give it a red hot go, this rant is not aimed at you in the slightest.

 

[O C Diver]

In 2019 one of the biggest marine insurers lost Lloyds as an underwriter and went with Berkshire Hathaway/Chubb.

So what you're saying is Lloyds recognized the Australian recreational boating insurance market as a financial looser and instead of raising rates which the Australian insurance company would have passed on to you, they canceled that underwriting. Clearly it wasn't America's fault that you (Australia) were seen as unprofitable to Lloyds.

Ted

 

[DDW]

So while I genuinely feel for those who have had damage or loss who have made a real effort to secure or move your vessel to a safe cyclone hole, the rest of you who couldn't be bothered and say, "it's ok, insurance will sort it out" well..........<insert rude words here>.

Not this hurricane, but years ago we were cruising on the sailboat, stopped in Salem, Ma. A hurricane - or what in the event turned out to be a post hurricane tropical depression - came over, the eye passing directly overhead. It was well forecast. Many people prepared their boats, removing canvas, tying multiple lines across docks, etc. (Part of the town's prep seemed to be emptying the liquor stores, but that is another story). However a large fraction of owners simply left their boats on moorings in the harbor, dodgers and biminis up, roller furling jibs up, mainsails on, no prep at all. We speculated that these were people who would as soon be rid or their boat, and found this the means to do it. It was milder than predicted, and only a couple of boats were blown ashore, but there was plenty of wind damage to canvas, shredded jibs, etc. Boats prep'd properly suffered no damage.

In Florida, insurance commonly requires the boat to be hauled for a named storm, or no coverage. Many policies will pay for the haul. But you have to be where you can be hauled, and hope they have hurricane ties in their storage lot. The marina we were staying at in Salem evicted everyone - you either had to be hauled, or leave.

 

[Marco Flamingo]

He actually threatened me in the parking lot in front of other witness. He really shouldn't have done that. He’s gone now.

Sleeping with the fishes?

 

[Simi 60]

So what you're saying is Lloyds recognized the Australian recreational boating insurance market as a financial looser and instead of raising rates which the Australian insurance company would have passed on to you, they canceled that underwriting. Clearly it wasn't America's fault that you (Australia) were seen as unprofitable to Lloyds.

Ted

Thousands of boats lost in America and the Carribbean ultimately affected profitability
Yes, Australia lost boats in cyclones as well but with a population a very small % of the USA it stands to reason the losses would have been considerably smaller here by comparison.

Lloyds and the insurance company involved are a worldwide company, not just Australian
It was the American insurance market that was the main loser and that's why they got out of marine industry with that company, one of the largest marine insurance companies around.
.

Berkshire Hathaway, an American company took over
I don't think Warren Buffet has a history for backing losers.

This article explains it well

https://www.pantaenius.com/au-en/in...il/news/taking-responsibility-for-your-craft/

 

[garbler]

I’m sure most of you who are on a safe coast or dodged a bullet now wonder about your premiums. I can’t answer this cause nobody can see the underwriters books but I have spent time with some folks who are major players in London in the reinsurance business and they are not happy with the way US companies handle their marine books and CAT Losses ( catastrophies ). Because of the volume of business and money on the table they have to be in the market and though fraught with big losses they must still be making money. For the record somebody posted about an adrift vessel in a bad storm causing damage to theirs. The responder (s) claimed the poster’s company would surrogate against the other vessel’s company. Generally this is wrong unless blatant negligence is found but major storms, or any named storm, will be a Vis Major loss, ie, Act of God and therefore no third party claim is applicable. Plus in loses of this type where proving negligence can be difficult the companies see it as throwing good money after bad on legal expenses.

I believe in the future underwriters are going to shift the burden more and more on the boat owner to exercise much more diligence or effort to move the assured property to safety. Sail vessels will certainly have to strip their rigs of sails as seeing a roller furled jib sailing a vessel off her moorings is inexcusable, same with Biminis and awnings. Though surge is the biggest threat in tropical weather events wind is a major force on vessels . As I pointed out in an earlier post pilings and floating docks are almost never strong enough or high enough to prevent marina docks from working their way off the tops of pilings and then driven ashore. Houses and buildings can’t move but boats can be moved and neglecting them especially these days with pretty reliable long range forecasting will be a considerable factor in future marine insurance cost equations.

As everybody surely knows some regions or coasts are a higher risk than others so expect regional premiums and exclusions to apply. Had Ian tracked a bit more North and the wrong or right side of the eye passed close to Tampa Bay the loss numbers would have been staggering not only the immediate shore boundaries but way up the rivers. Tampa Bay is a natural storm funnel but don’t tell the developers. In the mid Atlantic and Southern coastal areas The Federal Flood Insrance programs have demanded and often paid to raise homes to mitigate losses. This elevation certificate will control your premium. I find it odd that The West Coast of Florida is so lenient. So many structures built along the coast atop dredge fill no more that two or three feet above mean high tide. And New Orleans below sea level but at least heavily diked and levee’d. If you have boat wake coming over your bulkhead or seawall you’re much too low.


I might further add that salvaged boats have been a big business since the 80’s but smart companies are now realizing that there is some serious risk writing vessels that were years earlier a CTL ( Constructive Total Loss ). Many of these boats are bought up and after questionable repairs flipped without divulging the boats history and not just locally but all over the country. Many of these vessels still have wiring runs that were just clipped or cut back and reconnected. I can’t tell you how many sinkers or Cat Loss boats are handled this way and when Meggar tested the wiring reads considerable resistance. This is indisputable sign of insulation breakdown and risk of an electrical firesdown the road. Understand one thing and that is almost nobody makes out financially in boat losses. The time, hassle and just plain distress involved isn’t worth it not if your boat was purchased for pleasure not to mention your home.

Rick

 

[Hippocampus]

After having domestic insurance companies for years they all left the Caribbean. For a few years before that many required you return to the US at least once a year. They have all required you be south of 10 or north of 40 during hurricane season. If not you pay a much higher premium. Even if you are outside the zone many require a submitted storm plan. The storm plan for staying inside the zone in season is onerous and vey expensive to meet.
I flipped to Lloyd’s for one year. Then they left the US market and left it to a breakaway entity just for the US. Their premium was onerous and regardless of owner/operator or hired crew they stipulated how you could use the boat down to how many crew needed to be onboard for passage. Even the others wanted to review each crew’s résumé. Flipped to Concept special risk. It was better as unlike Lloyd’s I had “standing” so didn’t need an English lawyer if I made a claim. In 35 years I’ve had NO claims (knock on wood). In spite of that due to MMCC the storms are more severe so premiums have gotten ridiculous and hard to find.. Wet storage even if done well has become more problematic as current marinas (both floating dock and fixed) aren’t set up for the intensity of what we currently see. Proper dry is expensive with tie downs every 10’ going to appropriate anchors. Think the only answer even with insurance if you can find it all is to not be in the zone. If I was in FLA I’d be heading to Texas. If in SC headed up north.
I saw insurance costs while adhering to being out of the zone as stipulated double in real dollars. It more restrictive, has a higher deductible, and is harder to find. Many friends had geico but now they won’t insure except domestically. Some had Lloyd’s. For all intents and purposes their gone from the US market.
Totally expect a jump in my premium each and every time a named storm of significance goes through. A big jump with hurricanes. With MMCC don’t see this stopping during the rest of my life.

 

[backinblue]

Insurance is a huge profitable business. You'd be surprised to see the facilities that support any given company. Or maybe not. They have to compete with others, but it seems to be very lucrative and if storms cause lots of claims, premiums will likely rise for everyone. That's the very definition of insurance. We all pay and draw from a pool of cash. I'd love to know how much the overhead is from corporate. I'd bet it's 50% or more.

 

[Simi 60]

. With MMCC don’t see this stopping during the rest of my life.

Ok, I give up
What's MMCC.


Mobile Mini Circus Children?
https://mmccglobal.org/climate-action/

Mary MacKillop Catholic College?
Monday Morning Cooking Club,?
Mandalorian Mercs Costume Club?
Margaret Morrison Carnegie College?

I thought my google skills were up there.

 

[DDW]

It'd be nice (but unlikely to happen), to have a reduction in premiums if you took precautions. I'd assume you'd have to document those precautions. In gross form, hauling the boat for named storms already happens, but other than that, ratings are done with a very broad brush. I have no risk of hurricanes where my boats are kept, however the wildfire risk on my house is thought to increase substantially every year, even though the house has not moved. One reason is the fire officials recently drew a thick line with a fat crayon on a small scale map, and I happen to be living 1/8" to the wrong side of that line. 80 years of experience says the houses on the other side are no more or less at risk but pay half the insurance. That is the broad brush. On the other hand there are areas here that dependably burn every 10 - 20 years, yet get rebuilt again, and pay only 2x the insurance, should be 10x.

 

[KnotYet]

Ok, I give up
What's MMCC.


Mobile Mini Circus Children?
https://mmccglobal.org/climate-action/

Mary MacKillop Catholic College?
Monday Morning Cooking Club,?
Mandalorian Mercs Costume Club?
Margaret Morrison Carnegie College?

I thought my google skills were up there.

Man Made Climate Change

 

[Group9]

It'd be nice (but unlikely to happen), to have a reduction in premiums if you took precautions. I'd assume you'd have to document those precautions. In gross form, hauling the boat for named storms already happens, but other than that, ratings are done with a very broad brush. I have no risk of hurricanes where my boats are kept, however the wildfire risk on my house is thought to increase substantially every year, even though the house has not moved. One reason is the fire officials recently drew a thick line with a fat crayon on a small scale map, and I happen to be living 1/8" to the wrong side of that line. 80 years of experience says the houses on the other side are no more or less at risk but pay half the insurance. That is the broad brush. On the other hand there are areas here that dependably burn every 10 - 20 years, yet get rebuilt again, and pay only 2x the insurance, should be 10x.

Exactly. It would be nice to have different rates for the people who actually try and keep their boat from being damaged in hurricanes, from the people who don't do anything to prepare and say, "That's what I have insurance for." But, I don't think we'll ever see that.

 

[Hydraulicjump]

Thanks all. This input is great, but disturbing.

As an aside, if you want to read a hair on fire book about the marine insurance world, try Dead in the Water, by Matthew Campbell and Kit Chellel. It portrays the insurance and reinsurance world of commercial tankers. And Lloyds of London is a central character. Our little boats are tiny players in the marine insurance industry, which is rife with fraud.

 

[Benthic2]

MMCC = Man Made Climate Change

Insurance companies are not getting rich off premiums. In most cases their premiums collected match their claims paid, and their profit comes from their investments. They collect a bunch of money...hold it for a while....then pay it out as claims. Their profits come from the "hold it for a while" portion of their business model.

New boats cost more, labor and materials cost more, repairs cost more and boats are being lost at a greater rate, so it is no surprise that premiums are going up.

I think it was after Hurricane Andrew that redidential building codes changed dramatically and everyone complained that it would make new homes too expensive, but modern homes fair much better than homes built when codes didn't require hurricane protection. I suspect the same thing will happen to marinas. They will be subject to stricter codes that require more and deeper pilings that are taller, stronger docks, and better protection...and they will get more expensive but it will reduce boat loss costs. Ideally, Adam Smith's invisible hand will solve the problem. You'll get an insurance discount if you are in an updated marina that meats "Hurricane Standard XYZ" or you can stay in a substandard marina for less, but pay higher insurance rates.

The boating industry is a multi billion dollar juggernaut that isn't just going to go away or become the exclusive hobby of the elite. Then it would become more like private plane ownership and the revenue and job loss from such an industry contraction would be devastating.