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Exploring the global challenges of superyacht insurance

Business
Written by
Georgia Tindale

In recent years, the market for superyacht insurance has undergone significant changes. Following the withdrawal of many providers from Lloyds of London - traditionally the largest insurance hub in the world - we have entered a turbulent time for the industry which seems to be facing one of its toughest challenges to date.

To find out more, SuperYacht Times speaks to Mike Wimbridge, Managing Director for the London office of insurance experts Pantaenius, who explains why the balance of supply and demand is crucial for a successful insurance platform, and how recent global environmental and economic events have impacted the insurance market and begun to shape an alternative approach. Vanish yacht by Feadship in LondonPhoto: Charl van Rooy / SuperYacht TimesA (very brief) history of marine insurance

Having provided the industry with expert risk management solutions for well over a century since 1899, the Pantaenius Group is well placed to offer a broader, historical perspective on why the insurance world looks the way it does today. But as a professional in the yachting industry wishing to learn more, you have to look even further back to fully understand how the trade in marine insurance is organised. Firstly, it is important to note that Lloyds of London has played a central role in the trade for around 330 years. 

Emerging from the practice of private businessmen meeting in cafés where merchant ship risks were traded, a global marketplace for insurance products developed. Within this marketplace, investors could pledge their private assets against returns to cover risks but were still able to use these assets in the meantime. As a consequence, this principle established Lloyds as a successful alternative to insurance companies, which had enjoyed a de facto monopoly position in the 18th century as a result of a governmental allocation of trade privileges.Pantaenius Yacht InsurancePhoto: Pantaenius Supply and demand 

Fast forward through the centuries to 2010. From this point onwards, the dwindling number of attractive investment opportunities called more and more investors at Lloyds onto the scene, who were willing to cover risks in the private shipping sector in search of return opportunities. As happens under the laws of any market, while supply increased, premiums declined and competition intensified among providers. Eventually, premiums for superyacht insurance reached such a low level that the business could no longer be described as sustainable. 

As this decrease in premiums was occurring, the number of claims significantly increased as a result of several major loss events and natural disasters. As a consequence, a turning point was reached in the marine insurance market. By February 2019, ten Lloyds syndicates announced that they would discontinue or significantly reduce their marine business, resulting in a drastic reduction of capacity within the wider hull market, and with even more syndicates expected to withdraw within the next two years. In these circumstances, Lloyds had little choice but to tighten their premium level and, following years of apparent stability, policyholders were faced with three-digit premium adjustments in some cases. 

98m Abeking & Rasmussen superyacht AVIVA in LondonPhoto: Maurice ChildsPantaenius: Spearheading an alternative approach 

But, despite these challenges facing yachting insurance providers, alternatives are available. Mike Wimbridge, who has been managing the Pantaenius office in London since January 2019, points out that achieving balance in supply and demand is crucial for any insurance provider. "There is no denying Lloyds’ importance as an essential trading place for insurance products, but it is important to recognise that it may not necessarily be the centre of the insurance world. Although Pantaenius has been licenced at Lloyds for many years, much of its business has traditionally been written on company paper.”

He continues, “With healthy independence from the price battles at Lloyds, Pantaenius was able to concentrate on its core competencies and assert the quality of the products and services offered to be the only benchmark. Of course, a company like Pantaenius does not operate in a vacuum either. The pricing policy must remain viable and this can sometimes mean that rates increase as prices do in all other areas. Healthy, however, is the key again." 

Martin Baum, Managing Director at Pantaenius, adds: “It has always been clear to us that yacht insurance is an international business. Pantaenius has therefore never placed its access to the international market solely in the hands of external facilitators.” Aviva in LondonPhoto: Tom van Oossanen / SuperYacht TimesIndeed, thanks to its strategically-located offices in both Europe and further afield (including Germany, Monaco, the UK, Denmark, Poland, Austria and Spain, and additional offices in the USA and Australia) the family-run company can offer comprehensive world-wide cover of the highest standard.

Sea Owl yacht by Feadship Photo: Jeff Brown

"Pantaenius will continue to work with strong partners at Lloyds in the future," continues Mike, speaking with 30 years of underwriting experience under his belt. "However, our company’s unique structure allows us to take a different path whenever necessary or appropriate. With our network of thirteen offices on three continents, we can work across multiple time zones and languages without any third parties involved. This is a major advantage for every policyholder, captain and crew that surpasses the capabilities of most other providers. Pantaenius not only creates links between the world's superyacht hubs but also offers true local service wherever the yacht goes".

To find out more about the services offered by Pantaenius, contact the company directly using the details below. 

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