In early January, the National Marine Manufacturers Association forecasted a 2% increase in boat sales for 2020. While any hope that this new opportunity could transition to agencies looking to expand within the niche have been all but dashed by the coronavirus pandemic, the boating industry is still a dynamic and changing marketplace, which means independent insurance agents must stay up to date with the ebb and flow of trends.
With social distancing measures affecting families' summer plans, taking to the solitude of the open water may become one of only a few viable options during the best weather months of the year. Furthermore, as Americans struggle with the onset of an economic downturn, many boat owners may be seeking to sell or lay up their craft, leading to the potential for coverage complications.
Here are three trends that are influencing the personal marine market:
1) Pollution. Like most lines of insurance, personal marine is not exempt from costly pollution liability claims. For example, what if a boat sinks and fuel or oil leaks out and contaminates the water, or worse, a public water supply.
“A coverage gap to be mindful of is pollution liability, which is designed to help contain and clean up accidental fuel spills,” says Kennen Choiniere, marine program manager, Hagerty. “Depending on the location and size of the boat, clean-up efforts can be costly, and it is important to recognize this type of risk and have proper coverage in place.”
2) Carrier exits. Over the past couple of years there has been major disruption in the personal marine space due to severe weather-related events, explains Eric Fisher, marine sales, business development, American Modern, who has seen some carriers exit the market completely, while others have reduced their capacity.
“This has certainly forced some policyholders to shop for new insurance at their renewal,” Fisher says. “This is a prime opportunity to review the customer’s policy with them and make sure any replacement offer has adequate coverage.”
When recommending coverages, “a marine insurance policy, compared to using an endorsement on a homeowners policy, is almost always the best solution. These policies have coverage specifically designed for boats and yachts,” Fisher says. “It’s also important to know if the policy includes ensuing loss as well as the navigational territory.”
3) Technology. One of the main drivers behind the current insurance market is technology, explains Jeremy Backman, vice president, recreational marine sales, Chubb. “Many boat owners often look for the latest technological advancements,” he says.
“The cost to repair boats containing equipment using newer and costlier technologies is greater than the cost to repair boats containing older and less expensive technologies. Often, when there is damage to one component of a system, it may require the entire system to be replaced because older components may not be available,” Backman says.
“We’re also seeing higher horsepower and more efficient motors,” adds Fisher. “This means that many vessels are generally going faster with higher efficiency.”
Boating activities such as waterskiing, tubing and wake surfing are fun, social events. However, they bring risk of injury. Unfortunately, these accidents happen with some frequency and severity, Backman warns.
Agents can assist their clients by recommending “recreational boat owners take precautionary safety courses that include training for watersports participation,” Backman says. “Safety practices means carefully operating the boat when people are nearby in the water, or if a person is being towed behind on water skis or in a tube.”
“Other critical safety measures also include making sure someone is on the lookout for the person being towed and complying with state laws to display proper flags that alert other boaters that someone is being towed,” he adds.
Will Jones is IA managing editor.