Why boat insurance premiums are on the rise in Canada
Many of our policyholders are seeing an increase in their boat insurance premiums in 2019. Overall, all insurance costs are on the rise due to pressure from the larger market. Overall, many types of insurance are heading to a “hard market”, including pleasure craft insurance. We have not seen a hard market in Canada for some time. So the jump in premiums has come as a shock. A hard market is when there is tougher underwriting, reduced capacity, restricted coverage and higher premiums.
Factors impacting the increase in boat insurance
Marine insurance companies for the past five years and counting have paid out more in claims than they have received in premiums. As a result, premiums as charged are no longer sustainable and have to go up. The International Union of Marine Insurance (IUMI) has warned that it is not all smooth sailing for the boat insurance industry. According to the insurance association, there is a growing mismatch between premium income, covered risk, and claims costs. There are currently various pressures on the insurance industry that have resulted in increased premiums. Believe it or not, insurance companies do loose money, or no longer have a sustainable model for profitability. This will in the future affect the ability to pay out claims. Some of the major causes of boat insurance premium increases:
Boat insurance premiums are on the rise because the cost of repairs continues to increase. In the past two years labour and parts prices have, on average, increased 25% to 30% Older boats put pressure on the system as well as new boats that have more sophisticated technology. New technologies cost more to repair or replace. The disposing cost of damaged vessels has increased even more in compliance with newly imposed disposal regulations.
As vessels get older, parts are more difficult to find and in many cases are not available. The insurer determines if your damaged vessel will be replaced, repaired or written off. Where once something could be repaired, replacement at a higher expense is now the only option; putting additional pressure on why boat insurance premiums are on the rise.
Severe weather events including hurricanes are now more frequent and more severe. These events have resulted in more weather-related claims, and the cost of damage replacement and repairs is greater. The 2017 & 2018 Caribbean hurricanes have also contributed to the premium rises, with Lloyd’s of London (one of the major marine underwriters in the world) reporting billions in losses.
Policy wordings and coverages can vary among insurance companies. Many insurers have reduced coverage. Pacific Marine Underwriting Managers Ltd. however, continues to offer one of the broadest and most inclusive wording in the marketplace and has one of the most comprehensive boat insurance policies in the market, with many options and coverages to choose from, which boaters can customize to fit their exact needs. A large number of vessels are eligible for coverage including Southern Navigation coverage and the company has many discount programs available. PMU is a Canadian owned company.
In the 20 years we have been insuring vessels our commitment is to provide you with the best coverage and to get you back on the water as soon as possible after a loss. Contact us if you have questions about your renewal. We appreciate your business and thank you for your ongoing support.